Long-term supply agreements -- currently a “sign of the times” fad in the semiconductor industry as a hedge against insufficient fab capacity -- likely will “become more permanent” even after the current chip shortages abate, said Tower Semiconductor CEO Russell Ellwanger on a Q3 call Monday. LTSAs have been “catalyzed, maybe, by the present” chip crunch, “but I believe that it’s a model that really makes sense,” he said. “Capacity constraints from certain suppliers make everyone think, ‘Oh we have to address this differently,’ to ensure that in the long term we have business continuity,’ said the CEO. “I think that that’s good. Extremes put people more into a moderate median than if there were never an extreme.”

The public likely won’t gain much insight from the Commerce Department’s request for information on risks in the semiconductor supply chain, early submissions in docket BIS-2021-0036 from several chipmakers indicate. The department’s Bureau of Industry and Security put out the RFI in September -- submissions were due Monday -- to help the secretaries of Commerce and Homeland Security prepare a report to the White House on the chips crunch by the one-year anniversary of President Joe Biden’s Feb. 24 executive order (see 2109230038). BIS gave companies an Excel template for them to fill in with especially sensitive information about conditions upstream and downstream in the supply chain, including confidential sales and sourcing data, plus rundowns on order backlogs and an accounting of specific product shipments in the past month. Micron Technology responded by releasing nothing for public consumption, and Taiwan Semiconductor Manufacturing Co. and Tower Semiconductor left their templates largely blank. TSMC asked for confidential treatment of its cover letter, and its spreadsheet contained fewer tidbits of information than are available in its ordinary public filings. TSMC increased annual capacity 6% last year to 13 million wafers from 12.3 million in 2019, said its spreadsheet. Production volume increased 23.1% in 2020 to 12.4 million units (95.4% of capacity) from 10.07 million (81.9%) in 2019. TSMC forecasts 24% revenue growth in 2021 to $56.6 billion, but the template gives no 2021 guidance on wafer production or capacity. TSMC measures capacity in “12-inch equivalent wafers,” said its 2020 annual report. Its capacity increase last year “was primarily from the expansion of our 5-nanometer and 7-nanometer advanced technologies,” it said. Tower Semiconductor is a publicly traded analog “pure-play foundry company,” said its “supplemental explanation” sheet. It can’t comment, under nondisclosure agreements with its customers, on “order backlog specifics, product attributes, past month sales” or the locations of customers' packaging and assembly facilities.

Demand far outpaced the capacity improvements and increased shipments Microchip Technology achieved in fiscal Q2 ended Sept. 30, said CEO Ganesh Moorthy on a Thursday call. The company supplies embedded control solutions and other components to five commercial segments, including LED backlight drivers for consumer, automotive and industrial displays. Its “unsupported backlog” of orders Microchip was unable to fill “continued to climb significantly” from fiscal Q1, he said. It was the fifth straight quarter in which “our unsupported backlog for product requested in a given quarter has grown,” despite quarterly revenue having grown 26% year over year, he said. “We continue to experience constraints in all of our internal and external factories and their related manufacturing supply chains.” Microchip faces “a challenging environment for our factories and our partners' factories to hire, train, and retain employees to support the planned manufacturing ramps,” said the CEO. “Despite all this, through all the actions we have taken to increase capacity, we expect we will be in a position to support revenue growth for at least each of the next four quarters.” But the supply constraints are expected to “persist through much of 2022 and possibly beyond that,” he said.

Qorvo sees the industry "working through” chip shortages, even if the crunch forces 5G smartphone OEMs to leave some business on the table for calendar 2021, said CEO Bob Bruggeworth on a call Wednesday for fiscal Q2 ended Oct. 2. Chip shortages for tech devices are most acute in SoCs for MacBooks, not “RF front-ends” for 5G smartphones, “at least not from us,” said Bruggeworth, who chairs the Semiconductor Industry Association board. Chief Financial Officer Mark Murphy said the outlook for fiscal Q3 ending early January is for an 11% revenue decline sequentially even at the high end of guidance, reflecting “broad-based challenges in supply,” he said. “Our external supply chain is still recovering from disruptions in September, including shutdowns in Southeast Asia. Beyond that, select materials, products and production capacity remain tight.” In smartphones, “even where channel inventory for certain parts is healthy, customers lack silicon chips” to produce finished handsets, he said. “Given the supply and demand effects, we now see 5G smartphone volumes coming in below” the previously targeted 550 million handset shipments globally in calendar 2021, he said.

Qualcomm CEO Cristiano Amon had a relatively positive take on the semiconductor industry’s demand-supply imbalance when he said on a call Wednesday for fiscal Q4 ended Sept. 26 that the company expects “material improvements” to its supply by Dec. 31. He credited increases in capacity at Qualcomm’s suppliers, plus the company’s successful execution of its “second-sourcing initiatives.” Assurances of better supply are reflected in Qualcomm’s guidance for fiscal Q1 ending late December, he said. The company expects 16% sequential revenue growth at the high end of its guidance, plus 32% year-over-year revenue growth in its handset business. Android at the premium tier “is the primary growth driver in our handset business right now,” said the CEO. Like virtually all in the tech industry, Qualcomm in its September quarter endured supply constraints “really across the board,” said Chief Financial Officer Akash Palkhiwala. It’s conjecture “how the demand would have played out if there was supply across the industry, but we feel pretty comfortable that the overall supply picture is playing out exactly as we had planned,” he said. Qualcomm now has three parts that are “dual-sourced, that are available,” he said. There also are “capacity expansions with our suppliers that were previously being planned,” he said. The company continues to have “pockets” of the business in which “we would ship more, if we had more, but we see a lot of improvements,” said Amon. The industry will still face “some shortage” in calendar 2022's first half, “but as we get to the second part the year, in general, supply and demand are going to be aligned,” he said. The stock closed 12.7% higher Thursday at $156.11 after Qualcomm reported 56% year-on-year revenue growth in its handset business.

Global Q3 silicon wafer shipments reached a record 3.6 billion square inches up 3.3% sequentially from Q2 and 16.4% higher than in the 2020 quarter, reported the Semi Silicon Manufacturers Group Thursday. Higher shipments were recorded “in all diameters,” supporting “the large variety of semiconductor devices needed for the modern economy,” said the group. “Silicon wafer demand is expected to remain high, as many new fabs will ramp up in the next several years.”

Members of five tech and business groups “raised concerns” about the “sensitive data” the Commerce Department seeks in its Sept. 24 request for information about risks in the semiconductor supply chain (see 2109230038), the associations wrote Commerce Secretary Gina Raimondo Wednesday. Members also worry “how the U.S. government intends to use the data it collects,” said the Computer and Communications Industry Association, the Information Technology Industry Council, the Security Industry Association, TechNet and the U.S. Chamber of Commerce. The RFI seeks especially sensitive information from chip companies and their partners upstream and downstream in the supply chain, including confidential sales and sourcing data, plus rundowns on order backlogs and an accounting of specific product shipments in the past month. The associations urge Commerce to treat the information submitted “with the sensitivity and anonymity necessary to avoid jeopardizing the dealings of any given business,” they told Raimondo. Much of the information requested also is “dynamic, with bottlenecks changing on a frequent basis, so we caution that the RFI may not yield information that presents an accurate picture of the semiconductor supply chain,” they said. They encourage Commerce “to consider the nature of this unique challenge and how the information requested through this RFI may unintentionally distort the realities of the semiconductor supply chain,” they said. “This underscores why the ongoing exchange of information and coordination between government and the private sector is vital.” Commerce didn’t comment. With RFI submissions due Monday in docket BIS-2021-0036, ITI, which took the lead in publicizing the letter, didn’t respond to questions about why the groups took more than a month to air their concerns publicly with Raimondo.

Conference Board analysts are “very concerned about the semiconductor chip shortage,” Chief Economist Dana Peterson told a media briefing virtually Wednesday on top global economic trends to watch for in 2022. “This may not be something that is short-lived,” she said. “It takes quite a while to build” a new semiconductor fab, “but even if you could build one overnight, there’s going to be continued demand for high-tech goods,” she said. “We’re thinking there are still going to be supply chain issues” in the semiconductor sector “not only next year, but potentially into further years,” she said. “That’s going to be reflected in transportation costs, also the cost of goods and select services.”

Though Lattice Semiconductor is “not immune” to the industrywide supply constraints in chips, it “proactively built strategic inventory” last year “to get ahead of the potential supply chain tightness,” said CEO Jim Anderson on an investor call Tuesday for fiscal Q3 ended Oct. 2. “We started doing that in Q2 of last year,” and continued doing so through Q4, he said. “That inventory build last year certainly helped us navigate the current environment and support our customers well this year.” Though there are “particular silicon package combinations that are tight in terms of supply for us,” the Lattice supply chain team “continues to do a good job supporting our customers,” he said. “We're seeing all of our suppliers continuing to add capacity in anticipation of future years’ demand,” he said. New capacity is coming online “at a pretty fast rate,” he said. Q3 revenue in Lattice’s communications and computing business increased 26% year over year, with 5G infrastructure one of the “key long-term growth drivers” in the segment, said the CEO: “We were pleased with our growth in 5G Infrastructure in Q3 as 5G continues to be deployed worldwide.” The Lattice “stack” for 5G open radio access networks is “on track for release in the first half of next year,” said Anderson. Customer feedback “has been very positive,” he said. “We're fine-tuning the feature set so that it's exactly what the customers need.”

GlobalFoundries completed its initial public offering of 55 million shares at $47 a share, at the high end of its Oct. 19 range (see 2110190004), said the wafer company Monday. The stock trades on the Nasdaq under the ticker symbol GFS. With the IPO complete, Abu Dhabi investment group Mubadala owns 89.4% of GF’s voting shares.