Small semiconductor firms say China’s power crunch adding to problems from low capacity and trade war with US
- Small and medium-sized semiconductor companies say they had to freeze production over lack of power, adding to chip industry woes amid low capacity
- Executives and industry professionals discussed the issue at the 2021 Yangtze River IC Summit in Nanjing on Monday
China’s ongoing power shortage is putting a further dent in semiconductor production at small and medium-sized enterprises (SMEs) this year, executives said at the 2021 Yangtze River IC Summit on Monday, exacerbating a global chip shortage stemming from limited capacity.
“We had to halt production due to a power shortage at the end of September, and we will have to suspend production again tomorrow,” Li said.
He was one of several executives discussing the issue at the conference in Nanjing, the capital of Jiangsu province, which gathered hundreds of industry professionals from SMEs and some big names such as Qualcomm.
Semiconductor manufacturing companies need stable supplies of electricity, water and gas to maintain constant operation. Power shortages across northeastern China, Jiangsu and Guangdong have now put factory production in limbo, in addition to leaving many residents without power.
Wang Rui, founder and CEO at Guangzhou-based chip designer Unicmicro, said it has been challenging trying to get the additional capacity needed to fulfil soaring order numbers. He noted, however, that the company has seen its best performance since it was founded in 2017.
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Xu Dongmei, the moderator of the panel and the secretary general of China Semiconductor Industry Association Packaging and Testing Branch, said that she has been approached by associates asking for help to secure packaging and testing production capacity.
Aided by venture capital’s growing appetite for chip firms, some testing and packaging companies have sought to build their own facilities to avoid capricious price increases, according to industry professionals.
Increasing capacity for these facilities requires less investment and cutting-edge technology compared with foundries, which are incredibly expensive to build and must be secured from anything that could hurt the manufacture of microcircuits, such as dust or vibrations.
There are now also fears that an increase in capacity next year could move the semiconductor industry from shortage to surplus, pushing prices down and continuing a boom-and-bust cycle that the industry has faced for decades. This could intensify competition among China’s packaging and testing companies, hurting profits, said Xie Ruifeng, senior analyst at Shanghai-based semiconductor research company ICWise.