Micron chief warns 'severe shortage' of DRAM expected to continue this year Micron CEO Sanjay Mehrotra has warned about a "severe shortage" of supply in the DRAM memory market, with the situation expected to worsen as the year progresses. Speaking at an earnings conference call talking investors through the company's Q2 results, Mehrotra said: "As a result of the strong demand and limited supply, the …
Perhaps somebody more informed about the fab business can answer this.
A fab costs $MAX_INT to build - so you need to run your declining asset at 100% and presumably raw materials aren't a huge cost.
Similarly the high cost staff are in the design/tuning/process control end, not zero hours contract people you can scale down.
If you run the fab you know industry trends for how long the current DRAM/NAND design will be saleable before it's obsolete.
So in a downturn like 2020 wouldn't you run at some capacity making parts for stock, even if not at 3 shifts + overtime?
At least if you are a Hynix or Micron who own the fab rather than a TSMC making other people's stuff.
So in a downturn like 2020 wouldn't you run at some capacity making parts for stock, even if not at 3 shifts + overtime?
I believe that is the issue... there was no downturn for the chip industry (memory or IC) in 2020. With the WfH crush a year ago, companies and schools were buying mobile computers by the truckload. And that doesn't touch on what happened at the cloud providers. I recall a Azure UK datacenter quickly running out of servers. That was fixed by buying a shitload more servers.
I'm sure that type of buying happened everywhere, across all the cloud platforms last year too. Recall the success story of Zoom, going from 10 million daily users to 300 million in a few short weeks? That took a lot of computing capacity to sort that out.
Now we're faced with the fact that they've been running at 100%+ for a long time, all that slack capacity was consumed, all the inventory was consumed and now the shelves are bare and this year there are external threats to the foundries.
Well, this article was about memory. I mentioned mobiles and servers because they consume a lot of memory, along with other ICs. Usually you don't have one without the other.
Specific to the auto manufacturers are their extensive use of JIT inventories biting them in their ass. They turned down production slots with the chip makers during the pandemic when they stopped manufacturing cars and those production slots were given to other clients.
Car companies also aren't helped by the recent fire at a Renesas Electronics factory in Japan which is one of the biggest makers of automobile chips in the world.
"A fab costs $MAX_INT to build - so you need to run your declining asset at 100% and presumably raw materials aren't a huge cost."
TSMC pays around $2bn for operating materials so they aren't an insignificant cost - annual fab investment varies but sits around 5-8x this amount as a comparision.
While fab operators try to run at operational capacity (100%-routine maintenance) when there is sufficient demand, the challenge is maintaining the supply of chemicals/gases to do so when their are capacity constraints and delivery issues.
And if you are constrained by raw materials, particularly materials used for cleaning, deciding when to shutdown or reduce capacity can be critical. Your yields are heavily dependent on the purity of chemicals and cleanliness of systems so reducing wafer output may reduce the demand for wafers and maintenance requirements but you will still need to ensure filtration/cleaning systems are running.
2020 caused supply chain constraints with the supplies (particularly gases and cchemicals) as well as newer processes using materials that weren't manufactured in the volumes chip makers required - it looks like these issues will continue throughout 2021 unless Intel can start to take some demand awy from the Asian manufacturers.
If used water can be treated and returned to a drinkable state, then fab plants seriously need to think about a near-closed-circuit for their water needs.
If TSMC and Micron had planned ahead for draughts (which are not exactly unknown), they would have useable system that would allow them to function at full or near full capacity right now and draw less water from Earth's reserves every day.
I understand that it is economically costly, but to not do that is ecologically costly.
And then there's the problem of what they do with the resulting waste from the recycling center.
It's a mess any way you look at it.
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