Chip Packaging Lead Time Has Grown to 50 Weeks

Chip Packaging Lead Time Has Grown to 50 Weeks

British chip design firm Sondrel warned of problems in chip packaging, revealing that package lead times had increased from about 8 weeks previously to 50 weeks or more.

Packaging houses were hit hard by order cancellations in the early days of the Covid-19 pandemic, having to lay off employees, or even close down. With the surge in silicon production, they are struggling to cope with the surge in orders for existing capacity, though all are struggling to avoid the ever-longer lead times.

"The order in which the various stages of the supply chain are booked has completely changed. Previously, designs would be completed and then sent to wafer fabrication, which still takes about 12 weeks. At the same time, package details would be sent to the packaging company to be ready before silicon," said Alaa Alani, Sondrel's head of packaging. "The new schedule means that package designs must be completed and booked 20 weeks or more before the final silicon design to ensure that the silicon and package come together at the right time."

Not realizing this and planning accordingly could result in delays of up to 40 weeks in chip production. In Sondrel's view, one way to minimize the impact of delays is to start SoC package planning and design by assigning die bumps and assigning them x/y coordinates relative to the die corners. Moving this phase earlier in the supply chain sequence avoids large and costly delays.

MCU and PMIC to Bear the Brunt of Further Lengthening of Chip Delivery Time

Wait times for semiconductor deliveries increased slightly in March to a new high after a blockade in China and an earthquake in Japan further hampered supply, Bloomberg reported. Lead times - the delay between chip orders and deliveries - increased by two days last month to 26.6 weeks, according to research by Susquehanna Financial Group.

While chip users are once again facing longer wait times, lead times are increasing at a much slower pace than they were in 2021, when many industries were forced to cut production due to a lack of critical components. Lead times have increased for most chip types, including power management, microcontrollers, analog, and memory, according to a report by Susquehanna analyst Chris Rolland. He said the war in Ukraine, the Covid-19 blockade in parts of China, and the earthquake in Japan "will have a short-term impact in the first quarter, but could have a lingering effect on a severely constrained supply chain throughout the year.

The global semiconductor shortage began in the first half of 2020, driven by epidemic-driven demand for consumer technology and automobiles. Semiconductor producers reduced investment in increasing factory production, and the sudden shortage of chips disrupted the production of everything from smartphones to pickup trucks. It also fueled inflation by raising supply costs.

Chip industry executives warned that some customers will have trouble getting enough supply until 2023. Companies such as Intel Corp. are massively increasing the construction of new factories, most of which won't come online for production until next year at the earliest.

ASML Warns: Chipmakers Face Shortages for Two More Years

Chipmakers face a two-year shortage of key equipment. On Monday, the Financial Times reported that Peter Wennink, CEO of one of the chip industry's most important suppliers, the Dutch company Asmac (ASML), said the chipmaker's multibillion-dollar expansion plans will be limited by a shortage of key equipment over the next two years, as the current supply chain struggles to speed up production.

There will be a shortage next year and the year after. We will ship more machines this year than we did last year, and we will ship more machines next year than we did this year. But if we look at the demand curve, that's not enough. We do need to increase capacity by more than 50 percent, and that will take time.

ASML machines are used to etch circuits on silicon wafers. said Richard Windsor, a technology analyst at Radio Free Mobile, "It's one of the most critical companies in the semiconductor supply chain, a printer of silicon chips." Wennink also noted that ASML is working with suppliers to evaluate how to increase capacity, but it is not clear the size of the investment required.

His comments come as the chip industry is accelerating investment in new products in response to a global chip shortage and surging demand. Analysts expect the industry's market size to double by 2030, reaching $10 trillion.

Intel said last week that it will invest about 33 billion euros in Europe for manufacturing and research. Over the next decade, the investment will increase to 80 billion euros, depending on demand. The company also announced plans to invest $ 40 billion to expand its chip manufacturing operations in the United States.

The U.S. and Europe also plan to put out tens of billions of dollars to support chip makers. Pat Gelsinger, CEO of Intel, acknowledged that the shortage of equipment posed a challenge to the company's expansion plans. He has been in direct contact with Wennink about the supply shortage, and Intel has sent its own manufacturing experts to the company to help speed up production.

Gelsinger told the Financial Times, "That's a constraint today." But he stressed that there is still time to solve the problem. It will take two years to build the chip factory premises, "and then in the third or fourth year, there will start to be a sufficient amount of equipment. "

Wennink agrees that there is still some time to expand supply chain capacity, as many of the new production facilities will not be operational until 2024. But it won't be easy.

Related News

1、How Many Smart Sensors Should a Car Be Equipped With?

2、Huawei Responded How to Solve the Problem of Chip Supply

3、ICinsights： MCUs Will Continue to Rise in Price

4、An Artificial Brain Chip With 86 Billion Physical Neurons

5、Japan's Three-Stage Strategy to Revive the Semiconductor Industry

6、Why Meta Did Not Choose Qualcomm AI Chip?