Chip industry needs at least another year to address global shortage: SEIPI


Posted at Jun 14 2021 04:33 PM | Updated as of Jun 14 2021 04:57 PM

Chip industry needs at least another year to address global shortage: SEIPI 1
An employee makes a chip at a factory of Jiejie Semiconductor Company in Nantong, in eastern China's Jiangsu province on March 17, 2021. AFP file photo

MANILA - The semiconductor industry will need at least a year before it can address the global shortage of microchips, an electronics industry group in the Philippines said on Monday. 

The Semiconductor and Electronics Industries in the Philippines Foundation Inc said chip manufacturers cut down on equipment production last year in anticipation of lower demand with the onset of the pandemic. 

But when demand picked up later, the industry wasn’t able to respond as quickly as it should, said SEIPI president Dan Lachica in an interview with ANC’s Market Edge. 

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Reduced chip production also coincided with a higher global demand for chips amid the more widespread use of new technologies like artificial intelligence and electric vehicles, Lachica added.

“The usual lead time of 3 to 6 months for equipment is now 1 to 2 years because of the combined increase in demand and slow reaction to this increased demand,” Lachica said. 

In the Philippines, the semiconductor industry fared better than expected last year despite the disruptions of the COVID-19 pandemic. 

Lachica said they were expecting a contraction of around 20 percent for the whole of the industry in 2020. The actual contraction was a much lower 9 percent, he said. 

For 2021, SEIPI is looking at a growth of around 7 percent, Lachica said. 

He said that besides the lack of raw materials such as semiconductor wafers, the industry continues to be saddled with uncertainties such as supply chain disruptions, and travel restrictions due to the pandemic. 

Like other sectors, electronics manufacturers are also looking forward to the mass vaccination against COVID-19 to address these uncertainties, he said.