Lack of chips, a large corporation has to buy old washing machines to get the semiconductor components inside

According to Peter Wennink, CEO of ASML – the central company in the global chip manufacturing supply chain – in the context of the global shortage of chips, demand from semiconductor manufacturers shows no signs of slowing down, especially with chips that don’t require high-end manufacturing processes.

He even said that a large industrial group had to buy second-hand washing machines and then get the semiconductors inside to use for its own chip modules. He did not specify the name of this corporation, but the CEO said it was a sign that the chip shortage would persist for the foreseeable future, at least in some areas.

“The demand we’re seeing right now comes from a lot of parts of the industry,” The world is increasingly adopting Internet of Things (IoT) applications, said Wennink. “It’s very popular. We have significantly underestimated the extended range of demand. And I don’t think that’s going to go away anytime soon.”

He also notes that ASML’s use of photolithography is currently at an all-time high. And the signs are that their customers are not buying more machines to stockpile, but because they are not able to keep up with real production demand.

In the first quarter of 2022, ASML achieved net sales of 3.5 billion euros, gross profit margin increased by 49%, net profit of 695 million euros and new orders value of 7 billion euros. A total of 59 new and 3 used photolithography systems were sold this quarter, compared with 72 and 10 systems respectively in the previous quarter.

Lacking chips, a large corporation had to buy old washing machines to get semiconductors inside - Photo 1.

A WEEE Recycling Center worker walks past collected old electrical equipment at the EcoPark WEEE Recycling Center in Hong Kong. Photo: SCMP

Even the major chip device makers are struggling to get enough components to meet orders. And this is likely to make it more difficult for semiconductor manufacturers to significantly increase capacity in the near term.

Meanwhile, automakers have yet to overcome the semiconductor crisis that has plagued their operations for more than a year. Tesla said this week that its production remains hampered by shortages and soaring prices of key components. And Volkswagen warns there will continue to be negative effects from chip shortages. Earlier this week, Toyota Motor cut its production target by about 100,000 units for this year due to insufficient semiconductor supply.

Production shutdowns and component shortages due to the crisis in Ukraine could further increase supply chain challenges and delay the recovery of European auto sales in 2022. Passenger cars in March from Europe’s five largest markets were 40% lower than they were before the pandemic in 2019, suggesting the semiconductor crisis remains unresolved.

Lacking chips, a large corporation had to buy old washing machines to get the semiconductors inside - Photo 2.

Workers dismantle electronic waste at a workshop in Guiyu township in Shantou city, southern China’s Guangdong province, in 2014. Photo: AFP

Meanwhile, some signs of weakening consumer electronics demand have yet to translate into relief for manufacturers of other semiconductor-based products and devices.

TSMC, the world’s largest contract chipmaker, last week reiterated that its capacity will remain limited through 2022. A major Chinese chipmaker has already sold off all of its shipping capacity. their operation until 2023, according to the CEO of ASML.

TSMC CEO CC Wei highlighted the challenges its suppliers are facing during last Thursday’s earnings press conference, saying labor and chip constraints have led to delivery times goods longer.

According to research by Susquehanna Financial Group, semiconductor delivery wait times increased slightly in March, reaching a new high of 26.6 weeks. And not stopping there, the outbreaks that continue to break out in China as well as a series of earthquakes in Japan are continuing to hinder supply.

Refer SCMP chn

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