SIA Announces Request for Securing Semiconductor Supply Chain
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
Semiconductor investment is expected to rise in the US, benefitting related equipment manufacturers over the long term. SIA and AAI have requested that the Department of Commerce address the current semiconductor shortages.
SIA announces request for securing semiconductor supply chain
Investment in semiconductor production facilities is expected to increase in the US, benefiting related equipment makers such as ASML, Applied Materials, and Lam Research over the long term. The Semiconductor Industry Association (SIA) has requested that the Department of Commerce seek to secure a US semiconductor supply chain. In its request, SIA noted that 75% of global semiconductor production capacity is concentrated in East Asia, and 92% of production capacity for logic semiconductors below 10nm is in Taiwan and the remaining 8% in Korea. This regional concentration makes the supply chain very vulnerable to geopolitical risks and natural disasters.
SIA made the following recommendations to resolve the supply chain vulnerability: Enact laws on fostering semiconductor manufacturing in the US; ensure IP rights and global competition; facilitate cooperation with allies; and ease restrictions on immigration policy.
AAI offers solution to semiconductor supply shortage
The Alliance for Automotive Innovation (AAI) has also voiced its concerns over a shortage of automotive semiconductor supplies to the Department of Commerce. AAI believes that foundries’ automotive semiconductor capacity allocations are too low and the automotive semiconductor supply shortages will continue. As a result, automobile production is expected to fall 1.27mn units in 2021, which is equivalent to 15% of automobile production in the US. AAI expects this situation to last for at least six months.
To resolve this issue, AAI believes that it is necessary to expand semiconductor production capacity in the US with the help of government support. The US government announced on Mar 31 that it will invest US$50bn in chipmaking. It is expected to announce additional investments in the future to respond to the industrial demands and political situation mentioned above. Semiconductor facilities in the US will concentrate on foundries. We advise focusing on related equipment manufacturers.