Chips fall to five days’ supply
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The semiconductor shortage that has been crippling industries, from cars to consumer electronics, is far from over.
The US Department of Commerce has just warned that chip inventory held by manufacturers has plummeted to an average of only five days’ supply, down from 2019 levels of 40 days. Since then, pandemic demand for devices and disruptive sanctions imposed against China have created the chip crunch.
US commerce secretary Gina Raimondo said some US companies could be forced to temporarily close and furlough workers in the event of even minor disruptions. “This tells you how fragile this supply chain is,” she said. “Five days of inventory, no room for error.”
She urged Congress to pass the Chips Act, which has stalled in the House of Representatives but would unlock $52bn in subsidies to encourage domestic chip manufacturing.
That is a long-term solution, given the time it will take to construct “fabs”, such as the two Intel announced last week in a $20bn-plus investment in Ohio, subject to subsidies. These will be for high-end processors and more details on the chipmaker upping its manufacturing capacity could come with its fourth-quarter earnings call after market close today.
More mundane chips are in the shortest supply right now — the kind made by the likes of Texas Instruments, an unsung manufacturer of silicon. It reported fourth-quarter revenues last night that were around 10 per cent ahead of analysts’ expectations, with gross margins two percentage points better than expected at 69.3 per cent. It is increasing spending to boost its capacity, with new production facilities set for as early as the second half of this year.
Meanwhile, #techAsia reports China’s semiconductor master plan for self-sufficiency has suffered a significant blow. State-backed giant Tsinghua Unigroup has scrapped big memory chip projects in two Chinese cities after the debt-stricken company was hit by US restrictions on access to vital technology, according to this exclusive in Nikkei Asia.
The Internet of (Five) Things
1. Microsoft gaming is under its cloud
Microsoft’s cloud revenues jumped 32 per cent to $22.1bn in its last quarter, but gaming sales rose only 8 per cent, compared with revenues jumping by a half a year ago when there was stay-at-home pandemic demand. Lex says investors are more interested in the higher-growth enterprise business than Microsoft’s gaming ambitions with its Activision Blizzard deal.
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2. Amazon’s ambassadors recalled
Amazon has abandoned its much-maligned campaign of paying employees to share positive messages on social media, scrubbing the online posts that were meant to improve the tech giant’s image among the potential workers it needs to achieve continued growth.
3. Meta’s Diem to die?
Facebook’s former digital currency chief David Marcus left at the end of 2021, predicting there was still “greatness ahead” for Diem. But Bloomberg reports the project formerly known as Libra is weighing a sale of its assets and trying to find a new home for the engineers who developed it.
4. LG Energy Solution hopes IPO will boost its batteries
LG’s battery business delivered South Korea’s biggest-ever initial public offering last week, but can the float power a challenge to CATL’s dominance of the industry, asks Song Jung-a in Seoul and Hudson Lockett in Hong Kong.
5. Lynch loses latest legal round
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Tech tools — Chinese smartphones
Apple reclaimed the top smartphone seller spot in China for the first time in six years, with a 23 per cent market share in the fourth quarter, reports Ryan McMorrow in Beijing. Expect domestic handset makers to hit back this year, both at home and abroad. There were three announcements from them today: Huawei launched the P50 Pro, Realme announced the 9 Pro and 9 Pro+ and Xiaomi unveiled the Redmi Note 11 series.