Daily Management Review

Demand For Used Chipmaking Tools Increased Amid Global Semiconductor Shortage


Demand For Used Chipmaking Tools Increased Amid Global Semiconductor Shortage
The advance booking for its chips has currently exceeded its capacity at the Minnesota-based Polar Semiconductor which makes chips for automakers, said a report. But the company is finding it unfeasible to expand production lines to make more of the chip shortage across the world has forced shutdown of many auto making factories as the company is finding it difficult to find older-style chip manufacturing equipment.
Such older style equipment is used by chip makers such as Polar for manufacturing of chips on 200-millimeter silicon wafers which were first introduced as state of the art technologies about two decades ago. Now much large larger wafers are used to make more advanced chips. However there is still a lot of demand for the simpler and old fashioned chips.
There has been a global shortage of auto chips because of an unprecedented boom in demand for computer gear during the Covid-19 pandemic as well as an unexpected growth in demand for cars. 
The product cuts at three North American plants were extended by General Motors Co on Wednesday while also adding production cuts at another factory. On the other hand, in a warning by Fiat Chrysler owner Stellantis, the company said that the production issues because of the global chip shortage could continue well into the current year. And shifts for production of its F-150 pickup truck, a longtime profit driver, were also slashed by Ford Motor Co because of chip shortages.
A range of chips is used in cars by automakers. Some of those chips such as those used in infotainment systems are manufactured in the same cutting-edge chip factories where chip makers make smartphone chips. But older technology is used in making of other chips such as those in braking and engine systems.
But according to Surya Iyer, vice president of operations and quality at Polar, it can be as long as between six to nine months to het the machines that make those older chips. "There's no way I can expand capacity beyond just stretching my limits," Iyer said. "A real capacity increase would take nine to 12 months, minimum."
Leading buyers of used chip making gear are now stalking old factories in the United States, Japan and Europe and are awaiting for closure of such factories in the hopes that some of the equipment can be bought by them. This situation has arisen because resellers of chip making equipment are unable to find used equipment for selling.
"Demand is hot for used equipment, but we don’t have enough of them to cope with demand," said Bruce Kim, chief executive of South Korea's Surplus Global Inc, one of the largest dealers of used chipmaking gear.
Over the past six months, there has been an appreciation in the prices of used equipment by as much as 20 per cent even while there was a drop in the number of refurbished tools in its inventory to 1,000 compared to between 7,000 and 8.000 about a decade ago, he said.