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Q2 2022 Semiconductor News and beyond: the best news and breakthrough to know

Posted on March 30, 2022 by Jack Trompert

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Semiconductor Industry Faces Perfect Storm — Earthquake, Covid, Missing Chips, and Suspended Sales

As if the semiconductor industry isn’t already facing enough challenges, the first quarter of 2022 brought the industry a perfect storm of obstacles — including an earthquake in Japan, a Covid bubble in China, missing chips in trucks, and suspended sales in Russia. In fact, the one bright spot in the tsunami of bad news was the continuing effort to provide the U.S. semiconductor industry with $52 billion in subsidies from the U.S. federal government.

Continue reading our quarterly industry roundup on for more semiconductor industry news from the first quarter of 2022.

Federal Government Seeks Speedy Action on $52B in Subsidies for Scarce Chip Supply 

On March 1, 2022, in his State of the Union address, President Joe Biden called for Congress to send bipartisan legislation to his desk that would include $52 billion in subsidies for chip makers to ease the semiconductor crunch. The Senate passed its version of such legislation in June 2021, while the House passed its version on February 2022. Negotiators are now attempting to reconcile the two versions of the legislation. 

On March 9, 2022, President Biden met with executives of chip manufacturers in his continued effort to push the U.S. Congress to fund the $52 billion in grants to chipmakers. In attendance were leaders from Samsung, Micron Technology, Whirlpool, HP, Medtronic, and Cummins. “Today I'm urging the House and the Senate to work out the differences between ... the two versions of this bill. Get it to my desk as quickly as you can,” President Biden said.

On March 23, 2022, at a U.S. Senate Committee on Commerce, Science, and Transportation hearing, semiconductor executives made a case for the subsidies for their industry. The committee examined the correlation between American competitiveness and semiconductors, the impact of vulnerabilities in the U.S. semiconductor supply chains, and the importance of CHIPS legislation within the U.S. Innovation and Competition Act (USICA) of 2021 and the America COMPETES Act of 2022. Executives from Intel, Micron, Lam Research, and PACCAR gave testimony.

SIA, AMD, Intel, and more stop selling to Russia  

On February 24, 2022, the Semiconductor Industry Association (SIA) released a statement regarding new export control rules announced in response to Russia’s invasion of Ukraine. “The U.S. semiconductor industry is fully committed to complying with the new export control rules … in response to the deeply disturbing events unfolding in Ukraine,” said SIA President and CEO John Neuffer. 

On February 28th, Intel and AMD announced that they halted processor sales to Russia, after the West levied aggressive sanctions against the country for invading Ukraine. In a statement, Intel said, “Intel complies with all applicable export regulations and sanctions in the countries in which it operates, including the new sanctions issued by [the Office of Foreign Assets Control] and the regulations issued by [the Bureau of Industry and Security].” 

On March 8, 2022, Nvidia joined fellow chipmakers, suspending all sales to Russia.

The loss of chip sales to Russia will likely not be significant to the companies, according to the SIA. Russia accounts for a fraction of a percentage point of global semiconductor sales. Russia imports a large number of its chips from China, but they are not as advanced as those developed by TSMC or Intel. It also operates the Mikron semiconductor fab, which is only capable of a small number of 65nm process node chips.

Earthquake in Japan Halts Precision Parts Production  

On March 17, 2022, Japan's Renesas Electronics, Murata Manufacturing, Sony Group, and other precision parts makers halted some operations after an earthquake jolted the country's northeast. “An earthquake stopping production is a pure negative, given components are currently selling as fast as you can make them," said Hideki Yasuda, an analyst at Ace Research Institute.

Kyoto-based Murata, the top global supplier of ceramic capacitors, which are used in smartphones, computers, and cars, said it had suspended operations at four factories following the quake. Chipmaker Kioxia said some production equipment at a factory in Iwate prefecture stopped automatically after shaking caused by the quake was detected.

Rising Covid Levels Push Chinese Factories to “Closed-Loop Management” Protocols

On March 17, 2022, it was reported that in the face of rising Covid cases in China, many manufacturers have moved to a “closed-loop management” approach to keep factories running. This requires workers to eat, sleep, and work in bubbles isolated from the wider world. The protocol includes sterilizing premises as often as three times a day and testing for COVID daily. Jin Yong, a factory worker in Shenzhen, told Reuters he had not stepped out of the electronics plant where he works since late February, when they started operating the "closed-loop" system for more than 2,000 workers.

Among the companies who’ve moved to this stage are television maker TCL, chip fab Semiconductor Manufacturing International, and Apple supplier Shenzhen Deren Electronic. Few factories are prepared to meet the stringent requirements. For example, it’s estimated that only a few hundred of the tens of thousands of factories in Shenzhen would have the resources to conduct closed-loop management. 

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Jack Trompert

In 2010, Jack and Janet Trompert started Talent 101 with a clear new vision on how to deliver talent to the marketplace. To work at Talent 101 is to be a part of something creative and big. From our modest roots as an ambitious startup, to becoming a global workforce solution provider to the world’s most recognized semiconductor companies, our growth and momentum owes a lot to our strong company culture of customer service, can do attitude, sense of urgency and always focus on the client and talent.