CPU, GPU, IC components and peripheral products, which are already facing increased demand, are expected to be severely affected with extended lead times and rising prices in Q1 2021, because substrates are short.
Supply of substrates has been constrained due to demand growth outpacing capacity expansion. In July 2020, the Anjiomoto Build-up Film (ABF) shortage was as exacerbated after a fire impacted production from Japanese manufacturer Nittobo. This series of issues has caused ABF substrates lead times to stretch to 4-5 months and pricing to continue to rise by as much as 40%, which is wreaking havoc for CPUs, GPUs and some IC manufacturers.
Fusion Worldwide’s customers and suppliers have confirmed that the limited substrate supply is affecting AMD CPU production, forcing the company to maximize its limited resources. According to sources, substrate makers have been prioritizing Intel and Nvidia over AMD, and the company’s efforts to secure more supply has fallen massively short.
AMD will reportedly cut back support for small core count processors at least until the end of January in favor of higher-end CPUs that are more profitable. However, with the surge in demand from the education sector, it is hardly good news for PC manufacturers since focusing on higher-end CPU production could make an already-challenging supply situation even worse as consumers drive demand for personal computers into 2021. Shifts to Intel, as a result, will likely exacerbate supply gaps being seen.
Unfortunately, the situation could extend because the same substrate supplies that are affecting CPUs are also affecting the GPU market. In addition, mining activities are driving demand for as Bitcoin experienced growth in Q4 2020, and with the upcoming release of Filecoin.
In addition to the growth in mining activities, gaming has caused AMD and Nvidia major supply issues after allocations from their newest GPUs sold out immediately. The result is an ensuing backlog across retailers and scarce shipment confirmation from both GPU giants. There is no further supply expected for December, and both next-gen GPU constraints will persist as-is through Q1 2021.
Chipset constraints and logistics challenges have resulted in massive delays for other integrated circuits. Logic ICs affected include ASICs and FPGAs due to the common usage of ABF substrate on the components as well. As servers and ASICs pivot to high-frequency applications with the 5G rollout, the cloud services market and communication infrastructure could report delays or down-market supply constraints as well.
In addition to the substrate shortage, ICs and other semiconductors are also facing a global shortage of 8-inch wafers. This shortage is further exacerbated due to the recent US ban on SMIC exports, forcing the global supply chain to pivot to avoid widespread market decline as companies race to meet consumer demand in multiple sectors.
Overall, ABF suppliers are trying to increase production in the coming months, but with high demand across the semiconductor industry due to the substrate’s use, backlogs and lead times could extend into late 2021.