Due to the ongoing chip shortage that is crippling parts of the supply chain, ST Microelectronics (ST) plans to double its capital spending this year, buoyed by high demand for its semiconductors.
During ST’s fourth quarter earnings announcement, the company will spend between $3.4 billion and $3.6 billion in capital spending in 2022, up from $1.8 billion last year, which included a first production line at its Agrate, Italy, 300 mm fab.
ST manufactures semiconductors for a variety of industries manufacturing microelectromechanical systems (MEMS), sensors and processors for electric cars, industrial, consumer electronics and the communication industry. Its biggest clients include Tesla Motors and Apple Inc.
The chip shortage has impacted all levels of the supply chain, but has hit the automotive industry particularly hard, causing many automotive OEMs to suspend operations or downgrade forecasts for how many vehicles they can produce.
The chip shortage is also not expected to go away any time soon.
While the chip shortage has remained a problem in the electronics industry since late 2020 due to issues initially from the COVID-19 pandemic, problems have persisted as chip demand in general continues to grow as more semiconductors are needed in every sector.
However, chipmakers have reaped the benefits with pure play foundries such as Taiwan Semiconductor Manufacturing Co. boasting record sales along with new heights seen from electronics distributors.
Component makers are also doing very well with ST forecasting a 20% jump in revenues this year and Texas Instruments recently beating its own revenue forecast. Texas Instruments is also boosting capacity to help with the supply and demand of chips with plans to build a new 300 mm fab beginning construction this year.
The semiconductor supply is expected to remain in tight supply through the first half of 2022, according to International Data Corp (IDC). Automotive chips will remain impacted throughout the first half of the year, limiting vehicle manufacturing to use chip suppliers for higher value vehicles.
"Automotive semiconductors will continue to be a limiting constraint on the automotive market through the first half of 2022, but barring any unforeseen shutdowns or semiconductor manufacturing issues, supply should gradually improve through the second half of the year," said Nina Turner, research manager with IDC's Enabling Technologies and Semiconductor.
IDC said because the automotive market takes time to develop new vehicles, the automotive market will begin to improve in the end of 2022 and into 2023, barring no further supply chain hiccups.