Advantech, the world’s largest manufacturer of industrial computers you don’t use but sure appreciate in retrospect, has announced that the semiconductor shortage is impacting its business and reducing shipments worldwide. This new foray into what’s gone wrong in semiconductors is brought to you by the phonemes “CO” and “VID,” and by the number 19.
Advantech builds embedded solutions, industrial automation equipment, digital signage, IoT hardware, and a raft of similar products based on both ARM and x86. According to the company, its Q2 revenue is likely to take a 5-10 percent hit, while Q1 orders surged by as much as 50 percent compared with the same period last year. Revenue is still expected to grow next quarter — the drag isn’t enough to prevent expected double-digit growth in shipments — but the shortages are making it difficult for Advantech to predict what happens next.
“It’s a bit like everyone is crazily buying and hoarding toilet papers in a crisis. Everyone is fighting for resources at the same time, and I don’t see a turning point coming yet,” Advantech Chairman KC Liu told investors on Wednesday, according to Nikkei Asia.
Advantech reports mobilizing hundreds of employees across more than 50 business departments to try and mitigate supply shortages. Unless it’s arming them for battle and preparing to launch raids on rival manufacturers, that may not help. Miller Chang, the president of Embedded IoT at Advantech, has stated the company is running short on ~500 different components used across its product families. Attempts to ramp up secondary sources and/or to switch components are also underway.
We finally know who to blame for everything: Realtek. (Note: Realtek is not actually to blame for the silicon shortage).
The most ominous quote in the story refers to semiconductor lead times for various components. Audio codec chips and microcontrollers are now running more than 50 weeks behind. Graphics cards, power management ICs, Wi-Fi chips, Bluetooth, and LCDs are running at 20 weeks. CPUs and memory chips are the best off, here, with lead times of just 12 weeks.
According to Acer chairman and CEO Jason Chen, the problem is getting worse, not better. “We are continuously facing a condition that demand always exceeds supply,” Chen said last week. “We feel growing pressure because of the component shortages, and our staff are working with additional efforts to chase all the components needed every day.”
According to Chen, the true problem isn’t with CPUs and GPUs. It’s with shortages in smaller critical components that typically cost 50 to 80 cents. Shortages are still projected to last through the last quarter of the year, and Nikkei Asia reports that the shortage of Ajinomoto build-up film (ABF) that we reported on earlier this year isn’t getting any better, either. Innolux president James Yang has stated that the lead time on driver ICs for LCDs is now over six months, up from four last year.
The fact that CPU and GPU lead times are only about 12 weeks suggests, however faintly, that we might see prices on these components trend downwards as the year progresses — but only if nothing they depend on remains bottlenecked. So far, everything looks bottlenecked. It looks like we’ll be working through these shortages, on some level, for the rest of the year.
Feature image by Vannex.
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