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Pandemic triggers chip shortage  

The pandemic-triggered semiconductor chip shortage has spurred action on different fronts even as short-term prospects worsen. While governments are focusing on augmenting domestic capacity, chipmakers are busy in firefighting (literally in one case) and planning for the long term, besides dealing with takeover overtures. Some key developments on the chip front from the week gone by:

  • Japanese chipmaker Renesas Electronics, which controls around one-third of the global market for microcontroller chips used in automobiles, has said it would take at least 100 days to regain normalcy in production after a fire damaged 23 machines at its plant on March 19. Meanwhile, the Japanese government has asked Taiwanese companies to assist in alternative production.
  • Samsung says the production at its chip plant in Texas, which remained affected for over a month due to bad weather on February 16, has now reached near-normal levels.
  • TSMC says it will invest $100 billion over the next three years to increase production capacity at its chip plants. This move follows Intel’s recent announcement to invest $20 billion in expanding its advanced chip-making capacity.
  • India’s government is offering more than $1 billion in cash to each semiconductor company that sets up production units in the country, according to a Reuters report.
  • Hyundai has decided to suspend production at one of its plants in South Korea from April 7 to 14 following a shortage of chips.
  • China’s Wise Road Capital and its partners have entered a $1.4-billion deal to acquire South Korea’s Magnachip Semiconductor Corp, a display and power chip maker.
  • Micron Technology Inc and Western Digital Corp are in a potential race to buy Japanese semiconductor firm Kioxia Holdings Corp, the world’s second-biggest manufacturer of flash memory chips, says a Wall Street Journal report quoting sources. The deal could value the Bain Capital-controlled firm at around $30 billion, the report adds.
  • US-based chip equipment manufacturer Applied Materials has announced that its $2.2-billion deal to acquire Japan’s Kokusai Electric Corp from KKR has been terminated in the absence of any positive indication on Chinese regulatory approval.

Counterpoint Research

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