The global semiconductor industry is in the midst of the most constrained market ever experienced, which has disrupted manufacturing operations across all markets. The COVID-19 pandemic has been cited as the primary reason for the shortages experienced in the semiconductor market which has severely disrupted the supply chain through 2020, 2021 and now into 2022.

After a year of unprecedented volatility, the global demand for IC chips continues to outpace production, causing a ripple effect of delays in supply, extended lead times, double bookings and non-cancelable orders.

Wafer foundry partners are unlikely to have much flexibility through 2022. All fabs are running at or above maximum capacity, volumes are in short supply while prices of wafers continue to rise.

The Chinese government’s recent power usage curbs and lockdown in Xi’an is exacerbating the disruption in an already fragile semiconductor supply chain. Due to the Russian invasion of Ukraine, there is a potential disruption of supply of minerals and Noble gases. This will undoubtedly add further pressure on supply of raw materials and could potentially be used as a reason to increase semiconductor prices again. Until the supply-demand deficit is corrected, component availability and pricing will remain volatile.

In an effort to provide supply continuity, most of the Analog supply base are encouraging customers to load long term orders through the end of 2022 and into 2023 to enable better visibility for wafer and capacity planning.

Most of the CapEx investments won’t positively impact production volumes until the end of 2022 and will into 2023.

It’s now expected that the semiconductor crunch will persist through 2023.

Texas Instruments

TI continues to invest and adjust to the robust and continued demand that has triggered the global chip crunch. TI is facing unprecedented strong demand across their entire customer base which has resulting in exceeding all capacity to support some customers’ demand and minimal flexibility. Most of their capacity is sold out for 2022. TI cautioned that general semiconductor supply chain challenges will persist and do not rule out the possibility of further unforeseen delays even with some incremental new capacity coming online towards the end of the year.

TI is asking for 78 weeks of rolling JIT forecast. It is vital to provide long term forecast visibility with the current market constraints.

• The most critically constrained wafer processes are LBC5, 6, 7, 8 and 9. Lead times have stretched to 52 weeks or more (MPNs: TLCxx, TLVxx. TPSxx, DRVxx ).
• They are also highly constrained at their backend and assembly facilities along with continued shortages of lead frames.
• Major package constraint: QFN.

Capacity Expansion: Investing in new Capacity in 2021, 2022, 2023

• Backend Assembly: Chengdu – 300,000 Square Feet (Doubles Existing CDAT A/T Capacity) – Operational as of late 2021.
• Front End Fab:
  • Richardson Fab 2 – 300,000 Square Feet (30% larger than RFAB1) – Ready late 2022.
    • Will add $5B worth of advanced analog capacity.
  • Lehi Fab – Acquired from Micron. Advanced Analog and Embedded Processing – Ready 2023.

Monolithic Power Systems

• MPS  has increased lead times to more than 50 weeks for both standard and automotive products.

Maxim

• Maxim (acquired by ADI) has decided to harmonize their NCNR terms to the shorter window of 90 days to align with current practice for ADI’s products. This change took effect on January 26, 2022 and will not adversely affect any commitments to open orders.
• Maxim is facing constraints on TQFN/TDFN packages from their Assembly vendors.
• Automotive grade products are heavily constrained. On average, lead-times are between 40 and 60 weeks

Microchip

• Microchip continue to face accelerating demand and has outpaced supply. Lead-times have extended to 60 weeks for Standard Products and 62 weeks for Custom product.
• Microchip announced a Preferred Supply Program (PSP) which is designed to deal with the supply constraints impacting the electronics industry and requiring customers to accept new terms and conditions.

“onsemi” (recent rebrand from ON Semiconductor)

• Market demand  continues to exceeds their supply capacity. onsemi is facing tight supply and backend constraints. Lead times continue to stretch significantly. They are strongly encouraging customers to extend orders and forecasts deep into the second half of 2022
• Std Analog:  AC/DC, DC/DC, Interface (RS232, R485), VR, LDO, Driver, Mixed Signal/Amplifiers and Comparators all have quoted ~ 50 weeks lead time.

STM

• Lead times continue to stretch. Customers need to provide long term forecast and backlog coverage.
• Power management, AC/DC, DC/AC, Mixed Signal Amplifier & Comparator, Std Analog VR and LDO products are all being quoted to 65 weeks lead times. All automotive-grade devices are now reflecting 65 weeks lead times and all parts are considered NCNR.

Renesas

• Renesas is offering a Demand Secure Program (DSP) for 2022 to select customers. For those customers not covered and who are served through distributors, Renesas has encouraged them to load orders to cover demand until the end of 2022 to provide better visibility for wafer and capacity planning. All POs will be NCNR.
• Backend Assembly & Test constraints in Malaysia due to resource limitations caused by local Covid regulations and protocols.
• Lead-times: 52 weeks.

Diodes

• Lead times are stretching due to tight capacity in both front-end and back-end production.
• Lead times: 40 to 60 weeks.

ADI

• ADI is facing unprecedented strong demand and constraints at both front and back-end operations. Their reschedule policy has been changed from CRD outside 90 days to outside CRD 45 days, effective from February 21 onwards.
• Lead times: 50 to 90 weeks.

Foundry/OSAT update

• A few investments are being made for 8-inch capacity growth.
• 12-inch capacity expansion mainly on advanced process nodes.
• ADI  will invest -$900M in CapEx to expand internal 8 Inch capacity with 12-inch strategic opportunities being reviewed.

Assembly Update

• Significant CapEx investments by their OSAT partner has increased capacity in assembly.
• Additional CapEx decisions in progress.
• ADI actions - Long term agreement with OSAT partner. Co-investments with lead-frame and laminate suppliers

• Today’s unprecedented demand for semiconductors is driven by accelerating digital transformation. wireless/5G, IoT, and automotive are the most important applications driving increased demand over the next year.
• Foundries will exhibit another strong year in 2022 driven by increasing demand for 5G phones, automotive and high-performance computing.
• TSMC x Sony partnership: US$7 billion deal to build its first-ever semiconductor chip plant in Japan with Sony Semiconductor Solutions (SSS) Corporation which is expected to be fully operational by 2024.
• The industrial application segment is estimated to grow steadily in 2022 and beyond.
• The Global automotive industry is anticipating robust growth well into 2022. Some Automotive OEMs have had to periodically shut down production due to the severe shortfall from chip suppliers. Future investment in expanded foundry capacity will therefore be critical so that the automotive industry can avoid such supply chain disruptions in the future.
• Analog Devices completed their acquisition of Maxim in August of last year and are currently integrating operations.

As a direct impact from COVID-19, the semiconductor industry supply chain, including semiconductor wafers, foundry, and packaging, are facing a shortage of raw materials that are directly impacting production capacity.- Several semiconductor manufacturers have been forced to raise their prices to offset the cost to produce components.

These price increases are due to two factors: 1) strong demand for their product and 2) many of their material suppliers struggling to meet the demand which has led to increased costs and aggressive commercial terms.

Suppliers have strong Book to Bill ratios of more than 1.5:1  and their backlogs are significant.

• Analog Devices: Another round of price increases on some of their products in the combined ADI and Maxim portfolio. This round of price increases applies to both Direct and Distribution orders.
  • For Direct orders – they will start applying these new increases on shipments on or after January 1, 2022.
  • For Distribution orders - they will start applying these new increases on shipments on or after December 5, 2021, in delivery terms.
• Renesas: Increased prices by 10 to 20% for the former Intersil legacy products across all customers.
• STM:  Increased prices -10~15% especially in the renewal of 2022 contact prices with their end customers.
• onsemi –  Increased prices for Q1 2022 due to supply constraints, increased costs and defocus on legacy devices.
• TI – Increased prices of 10~15%, we saw many increases in the November timeframe for those end customers finalizing price agreements for 2022.
• MPS – Price increases effective from February 2022 onwards.
• Microchip – Price increase between 10 and 15%.
• Silicon Lab- Increasing pricing on all product lines, including existing backlog, started November 28, 2021.
• Future price developments are directly linked to each supplier’s capacity status which requires continued monitoring.

WSTS Market Forecast

• Long, protracted supply constraints expected into 2023.
• Most factories are running at 100% capacity with high book to bill ratios.
• Booking rates continue to outpace production and wafer availability across the industry. 
• Production output continues to increase each quarter, however, still short of fulfilling the robust demand.
• Capacity/Utilization: Current loading is very high with most of the front-end and back-end lines fully booked through 2022.
• Lead times: The average lead time increased in Q1’22 vs Q4’21 with the current average lead time around 40 weeks with many lines over 65 weeks, depending on package type.
• Lead times remains at all time highs.

• Revenue growth stems from expected continuation of strong dynamics in all the end markets. Prices are surging in the chip supply chain. With the continuation of robust demand, suppliers expect supply to be a challenge for the foreseeable future. The current front-end and back-end loading is very high with most bookings covering 2022 and beyond.
• The demand for semiconductors is driven by the acceleration of digital transformation. Wireless/5G, IoT, and automotive are the most important applications driving revenue over the coming years.
• ​Intel plans to acquire Tower Semiconductor for $5.4 Billion, this acquisition accelerates Intel’s global, end-to-end foundry business.
• Top chipmakers in Taiwan and South Korea are closely reviewing their stockpiles of critical industrial gases after Russia’s invasion of Ukraine sparked fears of supply disruption that could exacerbate the global chip shortage. Ukraine and Russia are important sources of noble gases and precious metals used in chipmaking. These materials include neon, argon, xenon and krypton from the former, and hexafluorobutadiene (C4F6) and palladium from the latter. Ukraine controls 70% of the world’s supply of neon, according to research company TrendForce.

• Price trends: Increased due to raw materials pricing and high demand.
• The entire semiconductor industry supply chain, including wafers, foundry and packaging is facing a shortage of raw materials or insufficient production capacity to meet the accelerated demand. 
• A global shortage of wafer capacity is causing price upticks and increased lead times for 2022 and beyond.

• Overall suppliers' book to bill ratios are still well above 1.2:1 and has resulted in a delay in forecasted improvement from early 2023 to the second half of 2023.
• STM, onsemi, Infineon and Nexperia’s capacity are fully booked for 2022.
• Second-tier manufacturers’ lead times remain stable, but we are seeing small improvements on some packages for Mosfet and Diodes.
• Average lead times based on technology:
  • General Diodes   30 -50 weeks
  • Switching Diode  40 – 52 weeks
  • Schottky Barrier Diode  30 – 52 weeks
  • ESD & TVS  30 – 52 weeks
  • Zener Diode  40 - 52 weeks
  • BJT Transistor   40 - 52 weeks
  • Low voltage Mosfet   40-52 weeks
  • High voltage Mosfet  52 weeks
  • Sic  39 – 52 weeks
• Infineon Mosfets are still under allocation with lead times ranging from 52 to 80 weeks.
• onsemi is still quoting lead times of more than 52 weeks with more than 50% of their products still highly constrained.
  • Capacity Expansion
    • Front-end:
      • Continue investing in new capacity.
      • Transition all production to multi-source 200mm.
      • IGBT +20% 200mm capacity growth.
      • FET +15% 200mm capacity growth.
    • Back-end Assembly:
      • Expansion of 50K sq ft assembly and test capacity per year.
      • Expansion of Power discrete and module multi-source capabilities.
• STM: Products remain on allocation with lead times on average 52 weeks and above.
  • Continuous expansion on their existing fabs are in progress.
    • Capacity addition, mix change, assembly & testing.
    • Strategic Initiatives – new 300mm wafer fab, GaN technology and SiC raw material initiatives.
• Nexperia remains under allocation across all parts, significant supply constraints on automotive MOSFET with limited flexibility within 52 weeks.
  • Capacity Expansion - Increasing global front-end and back-end capacity.
    • Front-end:
      • New 300mm (12 inch) wafer fab in Lingang (Shanghai). Investment by Wintech, goes live in 2022.
      • Wafer fab in Hamburg (Germany), Manchester and Newport (UK) – Ongoing conversion from 6 to 8 inch.
    • Back-end Assembly:
      • Expanding in Dongguan (China) factory.
      • Investing extra capacity in Cabuyao (Philippines) and Seremban (Malaysia).
      • Implementation of advanced automation.
• Diodes Inc lead times are continuing to stretch due to tight capacity in both front-end and back-end assembly.
  • Lead times range from 52 – 60 weeks.
  • External fab utilization is more than 100%.
• Vishay remains constrained – expansion plans in front-end and back-end (both internal with contractors).
  • Wafer increase: Schottky, Fred, PAR TVS and UNI & BI TVS. Back-end increase for multiple packages.
• Littelfuse circuit protection are quoting lead times of 45 weeks, however for MOSFETs and IGBTs lead times are increasing to 52 weeks to 62 weeks.

• Many countries such as US, UK and much of mainland Europe are seeing accelerated easing of Covid-19 mandates. The reopening of borders is fueling automotive, aerospace, infrastructure (5G), consumer appliances, telecom and industrial demand.
• The Russian invasion of Ukraine is set to worsen the supply of semiconductors, as both Ukraine and Russia are key exporters of raw materials used to manufacture various semiconductors. Particular attention should be paid to Neon Gas (Ukraine -70% of global supply) and Palladium (Russia - 45% of global supply). According to the latest US Commerce Department report on the semiconductor supply chain, the worldwide chip shortage will continue well into the latter part of 2022, and possibly even through 2023.
• Intel to acquire Tower Semiconductor for $5.4 billion. This could potentially cause additional disruption if Intel decides to use the capacity to support higher end chipsets at the expense of other component families such as analog and discretes.
• With huge investment and progress in SiC and GAN technology, it is forecast that the production capacity and demand for SiC will increase exponentially. With current lead times for SiC devices averaging around 39 to 52 weeks, it offers a  lead time price reduction along with higher production run rates. These technologies are targeted for customers with 650V – 3.3KV/high frequency applications such as electrification, industrial power supply, photovoltaic, heavy machinery, etc.

• Tier-1 suppliers such as Infineon, onsemi, STM and Nexperia have kept pricing stable with minor adjustments on specific package or MPNs only. While the price is stabilizing in Q2’22, we believe that there is still a risk of additional price increases in the coming quarters due to various factors such as wafer premiums, lead frame constraints, oil pricing, shipping and other costs.
• Infineon announced a round of price increases for Q3’22.
• Pricing for tier-2 manufacturers have been relatively stable and remain competitive in an effort to gain market share in this volatile market.
• Customers should be cautious with legacy or mature devices as we see pricing levels inflating by 20% or more with the distinct possibility of end-of-life (EOL) risks.

• The supply situation remains very constrained for Opto couplers, InfraRed (IR) devices and selected visible LED families including Circuit board indicator (CBI), Display and through-hole lamps going into Q2’22. This is primarily driven by the upsurge in semiconductor demand across all market sectors. Lead times are stretching out to beyond 18 weeks for all opto couplers and IR devices. Customers are strongly advised to place longer term order coverage for critical and sole source items through the end of 2022 to lock in capacity in order to prevent a supply disruptions.
• More single source semi-customized LED manufacturers, such as Visual Components, Panasonic, Nichia & Dialight, are announcing EOL of their legacy products used across many customer and markets without adequate advanced notice, LTB notice, or recommended replacement. Some Asian-based LED makers have also EOL’d products using Cree die as Cree continues to de-commit deliveries. Customers are advised to work closely with us to qualify Jabil preferred suppliers to mitigate supply risk.
• Mid-term, all suppliers are reporting pent up demand for remote access products in computing, teleconferencing,  access & mobile communications markets required to support work from home community.
• The following areas are driving growth for the invisible LED sectors: IR receiver for consumer products like set top boxes and smart metering, couplers for DC power supply, data communication & cloud computing; optical sensors for printers, mobility, lifestyle wearables and automotive applications. Demand for UV LED is picking up as countries begin testing generic UV light sterilization in places with high human traffic such as shopping malls and subways.
• Capacity utilization rates for many leading LED manufacturers with Asian production bases (Thailand, Philippines, Malaysia, Taiwan, etcd) are still constrained, as these sites recover and clear order backlogs from the pandemic shutdown. There is still capacity available if our preferred suppliers are qualified to quickly ease constraints from Osram, Vishay and legacy suppliers like Broadcom and Japanese suppliers. Leading automotive LED maker, Samsung Electronics is aggressively trying to penetrate European and US markets with better and lower cost solutions than existing automotive suppliers like Osram, Panasonic and Nichia.
• As much visibility should be given to the suppliers as possible especially for extended lead time products like couplers, to avoid any potential supply issues.

• The Opto coupler market has been consolidating with low end couplers (photo transistors) dominated by Asia- based suppliers like Lite-on, Everlight & CTMicro. The top coupler supplier, Broadcom, is still dominating the high-end, high-speed IC couplers market. Prominent indigenous suppliers in China (top 3) are LED makers MLS, Foshan Nationstar Inc. and Honglitronics which continue to gain shares amidst pandemic driven shortages.

• Prices for all SMD LEDs from Asia-based suppliers are stabilizing in Q2’22. However, there will still be some price increases for Circuit Board Indicators (CBI), light pipe and optocouplers due to rising costs of raw material and substrates (driven by acute shortage in semiconductor supply base globally), as well as freight charges.
• Higher prices are expected from high demand driven by products from the work-from-home market. Increased demand across all major markets notably automotive and wireless communication sectors also contributed to the supply crunch.
• Customers are strongly advised to work with us to qualify Jabil-preferred suppliers especially for sole source designs to mitigate the impact of the price increases. In China, pressure driven from higher labor costs is affecting price levels on labor-intensive parts, display and housing LED or through hole parts. As a result, our low-cost Asian suppliers have struggled to deliver additional cost savings to us. This is particularly prevalent on high-volume products such as smartphones and white goods.

• DDR4: Constrained.
• DDR3: Constrained.
• Legacy (SDRAM, DDR1,2): Stable and customers should qualify tier-2 suppliers for additional support. 

• Industry analysts predict the market will stabilization in the first half of 2022 forecasting limited bit growth with AI and 5G applications gradually rising. That said, uncertainty remains in the market while factories are running at full capacity of capacity.
• Demand continues to exceed capacity going into Q2‘22.  Expect product to be on allocation from most suppliers.
• Raw material shortages are contributing to extended lead times. 
• The situation in Ukraine is reportedly not likely to cause impacts to raw materials in the short term.
• Analysts predict the proportion of IT spending moving to the Cloud will increase in the aftermath of the pandemic, up to 14.2% by 2024.
• PC and server demand is increasing, and smartphone demand is solid moving into Q2.
• Suppliers remain cautious in capacity planning as global uncertainties continue to affect demand visibility.

• DDR4: Increases expected.
• DDR3: Increases expected.
• Legacy (SDRAM, DDR1,2): Increases expected.

• Asynchronous:
  • Low Power: Stable.
  • Fast SRAM: Stable.
  • Slow SRAM: Stable.
• Synchronous:
  • Quad Data Rate: Stable.

• Overall,  the market for SRAM is stable.
• A stable demand and supply base still exists in the marketplace today.
• Balanced market conditions are expected to continue throughout the first half of 2022, expect some lead times to extend due to increased orders being placed on suppliers.
• Although unlikely, Covid issues may still create problems with suppliers.

• Asynchronous: Stable.
• Synchronous: Stable.

• Planar NAND: Constrained.
• 3D NAND Flash: Allocated.

• Factory contamination issues at the joint Western Digital/Kioxia Nand factory could impact up to 6.5 exabytes of flash memory. Expect a ripple effect across all manufacturers especially those producing 3D Nand. Products will be on allocation for the next quarter or two.
• Expect a 10% increase in Nand Flash products and related products using Nand Flash.  (eMMC and SSD’s).  Several manufacturers have already announced the increase.
• Controller chips are currently on allocation causing delays and the allocation for end products at major suppliers of SSDs, eMMC. Memory Cards and USB devices. 
• The Russian invasion of Ukraine is reportedly not likely to cause further impact to Flash production or pricing in the short term.
• Looking forward uncertainties around Covid-19 still exist, factories can be closed at any time if an outbreak occurs in the region. Short-term demand has increased as production in China and automotive markets ramp back up.
• We need to provide suppliers as much forecast visibility as possible, along with hard orders to ensure supply.

• Planar NAND: Increases.
• 3D NAND Flash: Increases.

• Low-Mid Density NOR: Highly Constrained.
• High-Density NOR: Some Constraints.

• Supply of NOR Flash memory is anticipated to remain tight through 2022.
• Rising popularity of true wireless Bluetooth earbuds has increased demand for NOR Flash memory products and this is expected to continue through CY 2022. Coupled with 5G product introductions will make supply tight.
• NOR Flash Foundry partners are also seeing increased demand from non-memory products that yield higher margins which will limit capacity expansion plans for NOR Flash.
• The Russian invasion of Ukraine is not likely to cause material shortages, but customers need to be vigilant.  

• Low-Mid Density NOR: Increases.
• High-Density NOR: Increases.

• EEPROM: Stable.

• EEPROM is a mature memory technology.
• There is stable demand and a supply base that continues to support the marketplace today.
• Balanced market conditions are expected to continue throughout 2022.
• Make sure to monitor lead times and give ample forecast.

• EEPROM: Stable.

Allocation

• MEMs and sensor lead times remain constrained due to robust demand. Some products have lead times of 52+ weeks.
• Upstream supply constraints for raw materials (wafers, metals, resins, lead frames, plastics, substrates, etc.) continue to affect supply.
• Many suppliers have indicated that their product portfolio is on allocation.
• We need to plan and provide orders/forecasts to suppliers based on lead times.
• Maintain consistency of demand pushing out or canceling orders only when the position in the queue is not needed.
• Actively diversifying and adding alternate sources that are willing and able to support demand the shorter term.

Rapid Growth in Demand for Sensors

• Automotive electrification, healthcare, 5G, and IoT applications continue to fuel strong demand for sensing technologies.
• Added capacity from suppliers will go to innovative products with higher ROI, resulting in older sensing technologies going end of life.
• Supply of semiconductor-based sensors are affected by an ongoing worldwide shortage of semiconductor components
• The Russian invasion of Ukraine adds further mid to long-term uncertainties to the supply chain as noble gases, and precious metals used in semiconductor manufacturing are sourced from the region.

Price Increases

• Constrained supply and rising lead times continue to put strong upward pressure on sensor ASPs.
• Older technology products will be pressured to compete with higher ROI products within the vendor’s product mix. 
• Consecutive quarters of price increases issued by leading semiconductor manufacturers due to rising raw material cost driven by the sharp demand recovery. Many suppliers have signaled price increases for Q2’22.

• Lead times continue to extend due to wafer shortage issues at foundries, lead frame and back-end capacity. Most suppliers are experiencing very high book/bill ratios and are driving significant gaps in the supply/demand balance.
• Based on the status of various foundries’ client orders, we expect the current tight supply of wafer to persist throughout 2022. Foundries and subcons are reporting they are sold out for 2022 as global demand exceeds supply.
• All products are currently in tight supply with constraints at both front-end and back-end with current lead times between 46 and 52 weeks with some devices being quoted at 78 to 90 weeks. NCNR is mostly implemented to ensure the actual demand is placed as orders and to minimize double ordering.

• Revenue growth driven by the continuation of strong demand across all end markets. Prices are surging in the chip supply chain. With the continued robust demand, suppliers expect supply to be a challenge for the foreseeable future. The current front-end and back-end loading is very high with most capacity booked through 2022 and beyond.
• Suppliers are cautious on the impact of Omicron coronavirus variant as the fast-spreading variant has brought a return of Covid protocol in some regions.
• NXP - as of Q2’21, long term contractual purchase obligations are had increased 10X from the commitment reported in Q4’20.
• ST - plans to invest approximately $3.4 billion to $3.6 billion in CapEx in 2022 to further increase production.
• Intel to acquire Tower Semiconductor for $5.4 billion. This acquisition accelerates Intel’s global, end-to-end foundry business.

• There is a significant cost increase on wafers, lead frames, substrates, assembly and test and logistics. With limited supply of wafers, most suppliers are raising prices due to higher costs. Suppliers are forced to absorb some of the cost increases and trying to ensure supply continuity. Many suppliers are reporting strong book to bill ratios at 1.2~1.5:1 and their backlogs are extended through 2022 and the first half of 2023.
• We forecast additional prices increases in Q2’22, as demand is still very strong.