The economic recovery from COVID-19 “continues to take shape,” with demand for semiconductors “still far exceeding supply,” said Analog Devices CEO Vincent Roche on an earnings call Wednesday for fiscal Q3 ended July 31: “We, like many others in our industry, will face a constrained supply environment into 2022.” Demand continues to grow across all “end markets,” said Chief Financial Officer Prashanth Mahendra-Rajah. “The supply-demand gap is growing,” he said. Order backlogs are increasing “quarter over quarter,” extending “well into 2022,” he said. “This gap is likely to persist into calendar year ’22, given the long lead time it takes to add supply in the industry, plus just the broad strength of the demand.” Though Analog Device inventories are up year over year, that’s mainly for raw materials, said Mahendra-Rajah. “We can’t keep a finished good in stock, so when it’s produced, it either goes to the customer or it goes into the channel and then it goes out of the channel immediately. We’re struggling to build finished-goods inventory.” The semiconductor supply chain is operating “very much hand to mouth,” he said. The company’s focus is on increasing “our ability to supply by making some significant investments in capacity,” he said.

Alpha & Omega Semiconductor is “not immune to some of the supply chain constraints in the broader semiconductor industry,” said CEO Mike Chang on an earnings call Wednesday for its fiscal Q4 ended June 30. AOS is trying its best to manage the constraints and “mitigate any interruptions to all customers,” he said. It’s investing $100 million to boost capacity and upgrade processes at its production site outside Portland, Oregon, in hopes of generating $70 million a year in incremental revenue after the project is complete by December 2022, he said. “In the current business conditions and the shortage of capacity, it is increasingly important to have the ability to own and control our supply chain.” AOS also continues to ramp capacity at the China fab it runs as a joint venture with the municipality of Chongqing, said Chang. It’s maintaining close relationships with “multiple foundry partners” to procure “additional wafer supplies,” he said. Fiscal Q4 revenue in the company’s communications segment, which includes supplying power chips to smartphone OEMs, was up 14% year over year, down 17.4% sequentially from Q3. “This segment played out as expected, as smartphone business performed in line with normal seasonality,” said President Stephen Chang. AOS expects revenue in the segment to increase by mid-double digits in the September quarter, “as all major smartphone players in China, Korea and the U.S. are entering peak production,” he said.

Semiconductor demand “continues to outpace supply,” and Himax Technologies believes the “imbalance” could last “well into 2022,” said CEO Jordan Wu on a Q2 call Thursday. Himax supplies display-driver chips to TV, laptop, tablet and smartphone panel makers. Foundries are running at “more than full capacity,” but demand “shows no indication of abating,” said Wu. “We have entered into strategic agreements with foundry partners to cover both our short-term and long-term needs. We are in the process of entering into further such agreements as we speak, with some of them involving new foundry partners, leaving nothing untried to expand our capacity pool.” Himax projects Q3 revenue from large display-driver chips will increase more than 30% sequentially, said Wu. The monitor and notebook display businesses are expected to post double-digit growth, “benefiting from remote work and online schooling trends,” he said. For the TV segment, “we expect over 20% sequential growth in Q3, anchored by higher-end and larger-sized TVs, despite the slight dip in worldwide TV shipments anticipated for the second half,” he said.

About a billion chip-based payment cards globally run the risk of not being issued because the payments industry doesn’t have enough semiconductors to go around, reported ABI Research Thursday. It estimates the shortage will keep 347 million cards from going out in 2021, and 740 million cards next year. Though payment cards don’t get the attention or the support from governments they deserve, they’re “a critical enabler for global economies,” said analyst Phil Sealy. “Most concerning is the potential disruption to GDP,” because a lack of payment cards will directly translate into fewer purchases, he said.

The General Motors semiconductor supply chain “continues to be impacted by events like what is happening right now with the COVID spike in Malaysia,” where government factory shutdowns are common, said CEO Mary Barra on a Q2 call Wednesday. GM told employees Tuesday that some truck production will be curtailed next week, “even as we resume production at some crossover plants,” she said. GM hopes the combination of COVID-19 safety protocols and rising vaccination rates will help “minimize” supply chain disruptions, “but we do have to note the situation does remain fluid,” said Barra. “We are also putting long-term solutions in place to derisk our supply chain. This includes collaborating with semiconductor manufacturers and continuing to enhance transparency.”

Revenue from June semiconductor sales jumped 29.2% globally to $44.5 billion and increased 2.1% sequentially from May, reported the Semiconductor Industry Association Monday. Q2 revenue of $133.6 billion was up 29.2% over 2020's second quarter and was 8.3% higher than in Q1, it said. “Demand for semiconductors is projected to continue to rise substantially in the long term, as the world continues using chips to become smarter, greener, more productive, and better connected,” said SIA CEO John Neuffer. Year-over-year June revenue increased 43.2% in Europe, 34% in Asia Pacific, 28.3% in China, 22.9% in the Americas and 21.2% in Japan, said SIA.

ON Semiconductor shares reached a 52-week high at $45.18 in morning trading Monday after the company reported record earnings above expectations for Q2 at $1.67 billion, a 38% year-on-year bump. The stock closed 11.7% higher at $43.64. CEO Hassane El-Khoury said on an earnings call he expects more supply constraints through first-half 2022. ON is seeing growing demand for its automotive and industrial market products, said El-Khoury, saying the company is focusing on gross margin improvement within a strategy of “manufacturing footprint rationalization and product portfolio rationalization.” That includes looking ahead at “which products are we going to grow in and which products are legacy where we’re not going to be investing in.” ON is shifting to high strategic products “where we want to play.” The company is looking at categories that are starting to grow and will maintain growth over five-10 years. “When you have fab-filler products, which are low-value, discrete, commoditized products, you keep shoving them in the fab and they go up and down with the market,” he said. “We’re moving away from that,” said the executive, “to strategic, high-value products that are going to grow over time, and that capacity has been taken away from the discrete, commodity products that caused that volatility.” In focusing only on products with a growth trajectory, “whatever demand does, it’s going to be growth. Maybe it’s not high growth, but it’s still growth.” Q3 revenue outlook is $1.66 billion-$1.76 billion.

STMicroelectronics, like virtually all chip companies, is operating against “a backdrop of strong demand,” while “stretching the global supply chain,” said CEO Jean-Marc Chery on a Q2 call Thursday. “We have continued to work closely with our customers across all verticals and channels to adapt to this difficult allocation situation. At the same time, we were and are optimizing our investments to increase our manufacturing capacity.” COVID-19 “continues to be a challenge for the world,” further exacerbating the well-documented supply chain woes, said Chery. A new wave of COVID-19 forced the recent shutdown of ST’s assembly plant in Muar, Malaysia, he said. “Following approval from the authorities, we resumed operations after 11 days of closure.” The global semiconductor shortage will last “up to next year, minimum, especially on the onboard electronics,” he said. “Related capacity” in the sector is “very saturated and will be saturated for next year as well,” he said. The lack of visibility is “unprecedented,” and booking trends are “really consistent with this effect,” he said.

Cirrus Logic will source wafers from GlobalFoundries under a “capacity commitment” and pricing agreement signed “under the backdrop of the current global supply environment,” said Cirrus Wednesday in an SEC filing. The agreement requires GF to supply and Cirrus to buy “a defined number of wafers on a quarterly basis,” 2022 through 2026, in return for Cirrus paying GF a $50 million “capacity reservation fee,” it said. GF would be required to pay Cirrus quarterly “shortfall payments” based on chip pricing if it “fails to deliver the required wafers within defined grace periods.” Cirrus expects to buy at least $1.6 billion worth of wafers under the agreement, said the filing. Cirrus won’t disclose pricing terms, other than “the prepaid and the reservation fee,” because “that's a bit sensitive in terms of competition and other things for us to talk specifically about,” said Chief Financial Officer Thurman Case on a fiscal Q1 call Wednesday for the quarter ended June 26. The agreement “secures for us a very significant increase in our wafer supply and allocation,” amid the current period of “really overwhelming demand and a lot of challenge to meet that demand,” said Cirrus CEO John Forsyth. GF didn’t respond to questions Thursday.

The Commerce Department's Bureau of Industry and Security is “very busy” working to implement semiconductor supply chain recommendations from the White House in June stemming from President Joe Biden’s Feb. 24 executive order on the chips shortage and other supply-chain issues, said Sahar Hafeez, a senior BIS adviser. The agency is studying closer federal collaboration with industry on semiconductor demand and supply and is reviewing how export controls and investment restrictions might exacerbate supply-chain problems, Hafeez told an Information Systems Technical Advisory Committee meeting Wednesday. Perhaps the most immediate priority for Commerce is pushing Congress to pass and fund the Chips Act, she said. The bill, which would provide funding and incentives for U.S. semiconductor R&D and manufacturing, has been funded by the Senate but hasn't been approved in the House (see 2107220005). “We're laser focused on the House, and we encourage you all to help us get that across the finish line,” Hafeez told the ISTAC. She said Commerce is “cautiously optimistic” the House will approve funding. Though the global chip shortage has persisted for months, it still remains unclear to BIS which chips are most severely affected, Hafeez said. She said “mature node chips” are being “severely impacted,” but the shortage is affecting newer nodes as well, she said: “We've been trying to get more clarity. I don't know if it exists, That's an issue that we're grappling with -- the lack of transparency.”