Firms scavenge silicon from washing machines

A major industrial conglomerate has resorted to buying washing machines and tearing out the chips inside for use in its own chip modules, the CEO of a company central to the semiconductor supply chain has said.

ASML Holding NV CEO Peter Wennink remarked on the situation, without naming the conglomerate, during his company’s earnings call on Wednesday.

The beleaguered firm relayed its struggle to him only the previous week, he said, signaling that chip shortages are going to persist for the foreseeable future, at least for some sectors.

“The demand we are currently seeing comes from so many places in the industry,” Wennink said, pointing to the wider adoption of Internet of Things applications.

“It’s so widespread,” he said. “We have significantly underestimated the width of the demand. That, I don’t think, is going to go away.”

A major Chinese chipmaker has sold out its capacity through 2023, Wennink said.

Even major chip equipment makers including US-based Lam Research Corp are struggling to get enough components to fulfill orders, potentially making it more difficult for semiconductor fabs to significantly increase their capacity in the near term.

“On the demand side, the entire environment remains very strong, while continued supply-related delays could potentially limit how much wafer fabrication equipment investment can be executed in 2022,” Lam CEO Tim Archer said on an earnings call on Wednesday.

Automakers have yet to overcome a semiconductor crunch that has challenged their operations for more than a year.

Tesla Inc said this week that production remains hampered by shortages and elevated prices for key components, while Volkswagen AG has cautioned to expect continued negative effects from chip scarcity.

Earlier this week, Toyota Motor Corp trimmed its output target by about 100,000 units for this year on insufficient semiconductor supply.

Production halts and component shortages as a result of the Russia-Ukraine war could intensify supply-chain challenges and delay a recovery of European auto sales this year, Bloomberg Intelligence analysts Michael Dean and Cliff Makanda said.

Sales of passenger cars in Europe’s five largest markets last month were 40 percent below levels before the COVID-19 pandemic, indicating that the semiconductor crisis remains unresolved, they said.

Some signs of weakening consumer electronics demand have yet to translate into relief for manufacturers of other silicon-hungry products and devices, they added.

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, last week said that its capacity remains tight throughout this year.

In an earnings call on Thursday last week, TSMC CEO C.C. Wei (魏哲家) highlighted the challenges its suppliers are facing, saying a constraint in labor and chips has led to a longer delivery time for tools.

The wait times for chip deliveries last month rose slightly, reaching a new high of 26.6 weeks, after lockdowns in China and an earthquake in Japan further hampered supply, research by the Susquehanna Financial Group showed.