ASML CEO: Industrial conglomerate buying washing machines to rip out semiconductors
- Reference: 1650541392
- News link: https://www.theregister.co.uk/2022/04/21/asm_ceo_industrial_conglomerate_buying/
- Source link:
Talking on an [1]earnings call this week with financial analysts, Peter Wennick, CEO at ASML, said that "width of demand" for chips was "significantly underestimated" by industry and: "I don't think that is going away."
"I met the executive of a very large industrial company, a conglomerate, last week, and actually they told me that they're buying washing machines to rip out the semiconductors to put them in industrial modules. I mean, that's happening these days," he said.
[2]MIT, Amazon, TSMC, ASML and friends to work on non-planet-killing AI hardware
[3]World's top chipmaking equipment maker claims Chinese rival may infringe IP
[4]US-China chip cold war? It's only helping the Middle Kingdom, silicon makers warn
[5]Supply and demand means TSMC set to beat revenue expectations for Q4 2021
"Now you could say that's an anecdote but to be honest it happens everywhere. It is 15, 20, 25-year-old semiconductor technology that is now being used everywhere… driven by IoT type applications."
ASML, the world's largest supplier of photolithography systems, reported calendar Q1 2022 revenue of €3.13 billion ($3.41 billion), up 36 percent year-on-year, and net profit of €1.331 billion ($1.45 billion), up 91.5 percent.
[6]
Semiconductor lead times stretched to an average of [7]26.6 weeks in March , according to financial analyst Susquehanna, which collates data from distributors. According to Avnet, some [8]93 per cent of 530 engineers it interviewed across the globe are seeing delays in chip shipments and most expect the price to leap in the next 18 months.
[9]
[10]
Not one industry is immune to the shortfall in supply, although a particularly high profile casualty in the automotive sector, where the supply chain was less flexible and found it harder to recover supply following order cancellations in the early stages of the pandemic.
Richard Gordon, practice vice president for semiconductors and electronics at Gartner, told The Reg the example cited by ASML seems a "bit extreme" and not representative of the situation.
[11]
"More typical over the past couple of years is 'de-spec'ing', particularly in automotive where the auto-makers would de-activate non-essential functions (e.g. rear-seat aircon and things like that) in order to ship vehicles."
Gordon said ASML demand is from immediate customers – semiconductor vendors – and it has "less visibility into end-markets." ASML, he added, was trying to reassure investors on the earnings call as it is totally reliant on the capital expenditure from those chipmakers to grow production.
The long-term outlook for the semiconductor industry looks positive due to new applications including electric vehicles, industrial IoT, 5G, and depending on who you believe, the metaverse too but there will be bumps in the road in the medium term.
[12]
Gordon added:
We've just seen a classic peak in the semiconductor market – chip shortages, prices rises, inventory build-up, all of which led to a very high growth year and record revenues in 2021. But, this is a cyclical market. The shortage situation is easing; I think we are past the peak in the cycle.
On the supply side, capacity is going to come on-stream progressively from 2022 onwards and supply chain disruption in places like China will cause sporadic glitches in electronics production.
On the demand side the signs are not good from a macroeconomic perspective – consumer disposable income is going to get squeezed due to the rise in cost of living and increased taxation etc. Post-COVID, people are prioritizing any discretionary spending they can afford on things like travel rather than PCs and smartphones.
The chip industry expert said it he was already hearing about semiconductor inventories "being released back on to the market and orders for semiconductors being cancelled.
"The bottom line is that the industry is heading in to a down cycle, probably starting in 2H22 but certainly affecting 2023 and 2024 – this means that the industry will move from under-supply to over-supply (capacity investment on the supply side set against weakening end-market demand), which will put downward pressure on semiconductor pricing and result in a slow-down in revenue growth. The next up-cycle will begin in 2025 / 2026."
Given the investments in new chip fabrication plants in the US, including from [13]TSMC and [14]others , as well as [15]Europe muscling in on the action , the situation could get messy. ®
Get our [16]Tech Resources
[1] https://www.asml.com/en/investors/financial-results/q1-2022
[2] https://www.theregister.com/2022/03/30/mit_ai_chips/
[3] https://www.theregister.com/2022/02/11/asml_chinese_rival_ip_abuse/
[4] https://www.theregister.com/2022/01/15/us_china_chip_war/
[5] https://www.theregister.com/2022/01/10/tsmc_q4_revenue/
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YmF-ta7PqY3OqTIAXdUvPwAAAZE&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[7] https://www.theregister.com/2022/04/14/semiconductor_lead_times/
[8] https://www.theregister.com/2022/03/25/chip_shortage_report/
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YmF-ta7PqY3OqTIAXdUvPwAAAZE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YmF-ta7PqY3OqTIAXdUvPwAAAZE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[11] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YmF-ta7PqY3OqTIAXdUvPwAAAZE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YmF-ta7PqY3OqTIAXdUvPwAAAZE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[13] https://www.theregister.com/2022/04/20/us_chips_tsmc/
[14] https://www.theregister.com/2022/03/24/intel_chips_subsidy/
[15] https://www.theregister.com/2022/02/08/european_chips_act/
[16] https://whitepapers.theregister.com/
Re: From the title, I had a mental image...
Loose pile of ICs? Kinda like the Apple [] with the socketed IC's?
Not convinced...
...that discretionary spend will go on travel instead of phones, computers and white goods.
People have been conditioned over the last 2 years that home = good, people and outside = bad. As such they will stay at home, work from home and play on their PCs and phones rather than travel.
Ba dum tish
Brings new meaning to taking your car out for a spin.
Re: Ba dum tish
Hope it's not Boeing.
Re: Ba dum tish
Communicates using SOAP messages.
Re: Ba dum tish
Give it a rest!
Interesting
Assuming it's true it'd be interesting to know who this is and who their customers are. Traceability and counterfeit procedures go out the window, unless they are putting something in place to verify/validate what they get.
Re: Interesting
It's a good story, but why doesn't the conglomerate just offer a barrow load of cash to the washing machine vendor for their chip inventory. The washing machine vendor's pipeline is no worse affected than by having their retail stock hoovered up, and the conglomerate is not left with a pile of shiny crap metal.
Re: Interesting
Good point. But maybe the washing machines are already built and in shops with no more chips at the manufacturer?
Re: Interesting
Other options include:
* said conglomerate needed these chips ASAP and couldn't afford to wait for a supply agreement to be thrashed out.
* said conglomerate didn't want to get into a commercial agreement with the washing machine manufacturer due to being competitors or having some other business relationship issue.
* said conglomerate may very well be overall a large company, but the specific product for which these parts are needed is something they only build in small quantities, so it's somewhat less newsworthy than the anecdote suggests.
Re: Interesting
> and the conglomerate is not left with a pile of shiny crap metal
Ah, you've got a
Re: Interesting
Sounds to me like they're after a bunch of 74-series logic chips or something in that category. Something like that is not likely to be counterfeit as the stuff is cheap as chips as it is. I doubt someone will be laundering anything.
If I was buying a new product I'd expect a new product, not secondhand odds and sods
Not "Second hand" but "Field Tested" - expect to pay a premium.
Click bait
I was half expecting (hoping?) to read that ASML was the one ripping apart washing machines to be able to build their EUV machines.
That would have been some really next level MacGyver/A-Team style hacking.
Standards?
" they're buying washing machines to rip out the semiconductors to put them in industrial modules "
So they're installing salvaged commercial grade components in industrial specification equipment? I predict quite a lot of failures.
Re: Standards?
As long as it lasts until the warranty is over.
Re: Standards?
If they can get the commercial chips to last until semiconductor shortage ends (maybe in a year or two), that may be considered a win, even if they have to replace all of those chips during a future maintainance or something.
Especially if these are some costly industrial gear, for which there should be fat margins.
This proves it then, washing machines are significantly more complicated than they need to be if the chips harvested can be used in EUV machines, but then I suppose the washing machine maker NEEDS to get its jollies off knowing how often you wash your underwear and selling that to the maker of those japanese vending machines.
Just a thought...
Can you print out all the various predictions that company makes, preserving the paper as well as possible, so you can pull it out of archives in whatever time-frame they predicted, and check how far off/on the mark they were?
If you leave said stories as pure digital, perhaps a second copy into a specific directory called "Recorded Predictions" or some such.
I think there might be a decent story in how well their predictions fare. Perhaps broken down into "Nearest the Mark" and "Completely Fekkin' Wrong" sections to make it perfectly clear just how well/bad they do.
Predictions are like arseholes: everyone has one, everyone knows they're full of shite, but people keep expecting rainbow sparkly faerie dust for some damned reason...
Re: faerie dust
That’s what I get when I fart.
From the title, I had a mental image...
Of someone throwing printed circuit boards into a washing machine and expecting a loose pile of ICs after the cycle ended.