The latest in the global semiconductor shortage

The downturn in the chip industry started in the summer months, as crypto crashes caused blockchain miners to flood the market with previously hard-to-find graphics cards. Almost overnight, demand eased up and caused graphics hardware prices to drop by almost half. Nvidia’s CEO Jensen Huang admitted in August that the company made too many graphics cards that now it has to sell them for less money. But Nvidia isn’t alone in this mess.

Just last year, the only story about chips was that manufacturers couldn’t make enough of them to meet the strong demand for consumer electronics, cars, and other products that require semiconductors. But even as shortages continue for certain types of semiconductors, the story is becoming more nuanced, especially for giants like Samsung and AMD, who were flying high on revenues and profits in 2021 and into 2022.

President Joe Biden traveled to Ohio on Friday to celebrate the groundbreaking of Intel’s new $20 billion semiconductor plant, one of the first domestic chip-making facilities to come out of the recently passed CHIPS and Science Act.

Intel’s Friday groundbreaking ceremony kicked off construction of what the company has called the “largest silicon manufacturing location on the planet.” It’s part of Intel’s plans to invest $100 billion in Ohio over the next 10 years. The company has said that the project could take more than 7,000 workers to build the facility that is expected to house two separate factories and, once finished, employ 3,000 workers. 

President Joe Biden isn’t wasting any time in rolling out the $280 billion law to boost domestic semiconductor manufacturing. On Thursday, Biden signed an executive order to get the money flowing out to companies like Intel who want to build fabrication sites in the US.

Biden officially signed the CHIPS and Science Act into law two weeks ago, but Thursday’s order sets the sweeping American innovation project into motion. Biden’s swift implementation signals the administration’s urgency to boost US competitiveness against China and alleviate an incessant chip shortage that’s affected a wide variety of industries like automakers and gaming devices. 

President Joe Biden signed the CHIPS and Science Act on Tuesday, writing into law the $280 billion package that includes $52 billion in funding to boost US domestic semiconductor manufacturing. 

“Today is a day for builders. Today, America’s delivering,” Biden said during the White House signing ceremony on Tuesday. “The CHIPS and Science Act is a once in a generation investment in America itself.”

For nearly two years, you’ve had to be incredibly lucky, skilled, or patient to get an Nvidia or AMD graphics card at MSRP. We’ve liveblogged and livetweeted that hell of trying to buy a GPU online, fighting against an army of bots to navigate the buggy websites of retailers who didn’t have enough reason to care.

But, yesterday, I did the unthinkable. I saddled up to Best Buy’s website eight hours after the retailer’s weekly drop and bought an RTX 3070 Ti Founders Edition for its $599 MSRP.

Six months after predicting the global chip shortage would last until at least 2023, Intel CEO Pat Gelsinger is now suggesting it might be 2024 before we’re fully out of the woods.

“[W]e believe the overall semiconductor shortage will now drift into 2024, from our earlier estimates in 2023, just because the shortages have now hit equipment and some of those factory ramps will be more challenged,” he told CNBC on Friday.

For nearly two years, netting a PS5, Xbox Series X, or AMD Radeon and Nvidia RTX graphics cards without paying a fortune has been a matter of luck (or a lot of skill). At its peak, scalpers were successfully charging double or even triple MSRP for a modern GPU. But it’s looking like the great GPU shortage is nearly over.

In January, sites including Tom’s Hardware reported that prices were finally beginning to drop, and drop they did; they’ve now dropped an average of 30 percent in the three months since. On eBay, the most popular graphics cards are only commanding a street price of $200–$300 over MSRP. And while that might still seem like a lot, some have fallen further: used Nvidia RTX 3080 Ti or AMD RX 6900 XT are currently fetching less than their original asking price, a sure sign that sanity is returning to the marketplace.

Today, the White House is saying out loud what you’ve likely already heard: the chip shortage won’t end anytime soon. “We aren’t even close to being out of the woods,” said US Commerce Secretary Gina Raimondo in a briefing with reporters today, according to Bloomberg, The Washington Post, and others.

Her comments come alongside a new Department of Commerce report that cites chipmakers who “did not see the problem going away in six months,” which also isn’t exactly news: chipmakers like Nvidia and AMD have repeatedly suggested the shortage wouldn’t ease until the second half of 2022, while Intel has said it might not end until 2023.

We’re not out of the woods yet — not even close — but it looks like the prices of Nvidia and AMD GPU prices may finally be coming down. Tom’s Hardware in the US and 3DCenter.org in Germany have been charting eBay and local retail prices, respectively, and they’re each seeing the same thing: a substantial dip for nearly every new graphics card that Nvidia and AMD make.

Want an Nvidia RTX 3080? Just two months ago, that might have cost you $1,773 on the street — over two and a half times the manufacturer suggested retail price. As we reported in November with our own chart, that was typical of the hottest graphics cards, and Tom’s Hardware shows things got slightly worse in December. But in January, those prices have dipped 11 percent to just under $1,600 on average.

Many players eager to jump into Final Fantasy XIV’s highly anticipated Endwalker expansion have hit big queues since the game launched in early access on Friday. Part of the reason for the long waits is that the global chip shortage has prevented Square Enix from getting enough servers to handle demand, according to a blog post from producer and director Naoki Yoshida.

“When it comes to adding new Worlds, we need tens of ‘server machines’ for every World that we add,” Yoshida says. “Server machines are high-performance computers, which utilize numerous semiconductors. However, due to the COVID-19 countermeasures currently in place, many factories across the globe which produce semiconductors, have halted production or have faced labor shortages.

Samsung officially announced a new advanced chip-making plant in Texas, that’s estimated to cost around $17 billion and could create 1,800 jobs, as reported previously by The Wall Street Journal. The new plant will be located in the city of Taylor, roughly 30 miles away from Austin, where Samsung has an existing facility. The new site is roughly 1,200 acres in size, making it larger than Samsung’s Austin plant, the WSJ notes.

 Kinam Kim, the vice chairman and CEO of Samsung Electronics Device Solutions Division says in a statement that “With greater manufacturing capacity, we will be able to better serve the needs of our customers and contribute to the stability of the global semiconductor supply chain.” He continued, “In addition to our partners in Texas, we are grateful to the Biden Administration for creating an environment that supports companies like Samsung as we work to expand leading-edge semiconductor manufacturing in the U.S. We also thank the administration and Congress for their bipartisan support to swiftly enact federal incentives for domestic chip production and innovation.”

The global chip shortage has had a massive effect on the entire technology industry for more than a year, but a wave of gaming hardware news over the past week and change has shown that things aren’t going to get better anytime soon. Gaming companies big and small are going to be feeling the sting well into next year, and it’s not just Sony and Microsoft’s next-gen consoles that could be hard to get a hold of. 

Nintendo was arguably the first to kick off the waterfall of news, revising its Nintendo Switch sales forecast for the fiscal year down by 1.5 million on November 4th “due to the effects of the global semiconductor shortage,” according to the company. Nintendo president Shuntaro Furukawa elaborated further in a Q&A, saying that “there has not been a major improvement in the situation” since the beginning of the fiscal year (which starts in April). The company is “evaluating alternative components and reviewing our designs,” according to Ko Shiota, GM of Nintendo’s Technology Development Division, but it’s unclear right now if anything it is looking at might make it easier to find a Switch on the shelf. (And if you don’t already have one of the Switch-compatible N64 controllers, you’re out of luck until next year.)

Sony is struggling to make PlayStation 5 consoles and has internally lowered its production forecast for the current financial year, according to a report in Bloomberg. While the company was expecting to assemble 16 million units between April 2021 and March 2022, that figure is reportedly now at around 15 million.

Sony had publicly predicted that it would sell 14.8 million PS5 consoles this financial year, so while this isn’t a large downward revision, it shows just how tight the supply is likely to be for the foreseeable future. The figure of 16 million units would have allowed Sony to meet that goal while securing additional stock for the following year.

Since the beginning of the pandemic, the demand for microchips has far exceeded supply, causing problems in every industry that relies on computers. And if you’re a Decoder listener, you know that that is every industry. Right now, major automakers have unfinished cars sitting in parking lots waiting for chips to be installed. Game consoles like the PS5 and Xbox Series X are impossible to find. And even things like microwaves and refrigerators are impacted, because they contain simple controller chips. 

So we realized it was time to figure out what caused the chip shortage, why that happened, and how we are going to get out of it. 

Ford’s F-150 was hit by the global semiconductor shortage, and now its flagship Mustang Mach-E electric vehicle is seeing a serious delay too — by a minimum of six weeks for prospective owners who were scheduled to get their vehicle between July 5th and October 1st. That’s according to emails Ford reportedly to buyers today (via Electrek), though Ford tells us the email was a draft that has not yet been sent to affected customers.

Here’s Ford’s statement:

General Motors is dropping wireless smartphone charging from some new SUVs because of the global microchip shortage. It’s the latest feature to get the axe at the company due to the low supply of semiconductors, as GM has already pulled HD radio from some models, along with auto start-stop and a fuel management module that made pickup trucks slightly cleaner and more efficient.

Certain trims of the 2021 Chevy Tahoe and Suburban, as well as the 2021 GMC Yukon, made after July 12th will no longer include a wireless charging pad, as was first reported by the GM Authority blog. But GM tells The Verge that certain 2022 Buick Enclaves, Chevy Traverses, and Cadillac XT5s and XT6s made after August 2nd are also affected.

Samsung has downplayed a report that claimed the company has suspended production of an upcoming phone called the Galaxy S21 FE. Korean publication ETNews alleged over the weekend that production of the unannounced phone had stopped because of a shortage of semiconductors, and that Qualcomm processors had been reallocated to foldable devices.

The report has since been deleted, and Samsung now says it hasn’t made a decision on whether to halt production. In a statement texted to Bloomberg, the company says “While we cannot discuss details of the unreleased product, nothing has been determined regarding the alleged production suspension.”

New outbreaks of COVID-19 in Asia could create delays in the global supply chain and exacerbate the global semiconductor shortage, according to a new report from The Wall Street Journal.

Taiwan, which is a significant hub for chip manufacturing, is currently experiencing a surge of COVID-19 cases. On Saturday, Taiwan’s Central Epidemic Command Center announced that there were 251 new confirmed cases of COVID-19 and 26 deaths. On Friday, the agency reported 287 new cases and 24 deaths. And cases have been on the rise since early May. “Starting on May 10, COVID-19 infections jumped from one to three-digit figures within a matter of days,” South China Morning Post reported.

After months of political jockeying and procedural hurdles, the Senate approved a massive science and technology bill Tuesday to boost US competitiveness with China. The bill invests billions into emerging technology industries like artificial intelligence, semiconductors, and quantum computing in the US. 

The bill — titled the US Innovation and Competition Act or USICA — builds off a previous proposal from Senate Majority Leader Chuck Schumer (D-NY) called the Endless Frontier Act. Endless Frontier was lauded as one of the first big bipartisan bills to come from the Biden administration. But over the last few months, the bill, which was seen as a must-pass piece of legislation for both parties, was bloated with political mush and much of the original funding was watered down as it moved through the Senate process.

Sony doesn’t expect the PlayStation 5 supply situation to improve any time soon, according to comments its CFO reportedly made to analysts following the company’s recent earnings report. Hiroki Totoki said that it’s difficult for Sony to keep up with demand for the PS5, according to Bloomberg, and that the situation is likely to continue into 2022.

“I don’t think demand is calming down this year and even if we secure a lot more devices and produce many more units of the PlayStation 5 next year, our supply wouldn’t be able to catch up with demand,” Totoki reportedly said, later adding “We have sold more than 100 million units of the PlayStation 4 and considering our market share and reputation, I can’t imagine demand dropping easily.”

New cars are getting more expensive thanks to the global semiconductor shortage. And the price of used cars is going up, too.

About 13 percent of people who bought a new car in the US in April paid above sticker price, according to Jessica Caldwell, director of insights at Edmunds. Last year, only 8 percent of buyers paid more.

The PC market had a great first quarter, despite the global shortage of semiconductor chips. Research firm Gartner estimates that shipments of “traditional PCs,” meaning laptops and desktops, are up by 32 percent compared to Q1 2020 (via CNBC). IDC puts the number even higher, estimating 55 percent growth year-over-year. This seems to be the continuation of a trend — the PC market had a great 2020 as well.

Both firms agree that the growth is atypical — Gartner says that the growth is the fastest it’s seen since it started tracking the market in 2000, and IDC says that the drop in shipments from Q4 to Q1 is the smallest it’s seen since 2012. The raw numbers are also impressive — Gartner estimates that just under 70 million PCs were shipped, while IDC estimates around 84 million.

Apple’s next iPad Pro may face supply constraints at launch due to issues in production, according to a new report in Bloomberg. Apple’s suppliers are said to be having trouble with low manufacturing yields for the new Mini LED display rumored to be the key feature of the new 12.9-inch model; one manufacturer has reportedly paused production.

Nikkei reported last week that iPad production had been delayed by a shortage of displays and display components, though the publication didn’t specify which models had been hit. According to Bloomberg’s Mark Gurman, the new iPad Pro lineup is still expected to be announced later this month.