Chip supply crunch to last two years, Macronix says

Taipei Times

March 30, 2021

Macronix International Co (旺宏電子) yesterday said that the chip crunch could persist for two years, as the world’s major suppliers have been cautious about expanding capacity while demand for NOR flash memory chips has been mounting, especially for vehicles.

Macronix, the world’s biggest supplier of NOR flash memory chips, said its factories have been running at full capacity and are dealing with additional requests for chips.

“Our factories are all full… Our principle is to support our long-term clients. New customers have to try their luck,” Macronix chairman Miin Wu (吳敏求) told reporters. “What we need to do is make as many chips as we can.”

Wu said that there would be a longer shortage this time, compared with the one in 2017 that lasted for a year, as some of the world’s major chipmakers, such as Micron Technology Inc and Infineon, are considering scaling down production due to high volatility.

China’s GigaDevice Semiconductor (Beijing) Inc (北京兆易) is a chip designer and is reliant on capacity supply from Chinese foundries, which would be limited given healthy market demand, Wu said.

While chip demand is mounting for a wide range of applications from smart devices and vehicles to medical devices and home appliances, it would take at least two years to build a new factory to supply chips, he said.

Macronix supplies memory chips to most automakers in Germany, Japan, South Korea and the US, and an automotive chip shortage would help the company gain market share, he said.

Macronix is also bullish about its expansion in the medical segment.

The chipmaker said that it supplies chips for devices such as those used to detect blood sugar and inject medication for people with diabetes, as well as for medical patches that are used to monitor people’s heart conditions.

About 13 percent of the chipmaker’s revenue came from the automotive, industrial and medical device sectors last year, up 1 percentage point from 2019.

Macronix would not rush to expand capacity, as it would have to carefully calculate the benefits of such a significant investment, Wu said, adding that it has a spare plot of land for further expansion in Hsinchu.

Macronix is still in talks with several potential buyers to sell a 30-year-old 6-inch fab, Wu said.

“We are in the process of selling the old fab,” Wu said. “We may cut a deal next quarter.”

It has been speculated that local chipmakers Vanguard International Semiconductor Corp (世界先進) and United Microelectronics Corp (聯電) were on the short list of buyers.

Macronix declined to disclose the names of the potential buyers.

Macronix has budgeted NT$3 billion (US$105.07 million) on capital expenditure this year, the company said, adding that it would raise the figure if needed.