“Only time will tell” if Russia’s Ukraine invasion “worsens the existing strains on the semiconductor supply chain,” blogged Gartner analyst Gaurav Gupta Tuesday. Many chip manufacturers have claimed diversity in their raw materials and gas supply chains with sufficient inventory, “and they actually don’t expect to see an immediate impact beyond already-present shortages, he said. But many are wary of “long-term ramifications if the situation persists or escalates,” he said. Semiconductor Industry Association CEO John Neuffer in a statement Feb. 24, the first day of the invasion, said chipmakers have "a diverse set of suppliers" of key materials and gases, "so we do not believe there are immediate supply disruption risks related to Russia and Ukraine” (see 2203070014). But Gartner’s Gupta said the impact on “raw material supply, market demand and supply behaviors depend[s] on how the situation unfolds, so the biggest risk is whether a new wave of panic buying sets in.” Panic buying was “one of the major reasons for the onset of the ongoing semiconductor shortage, as it overstretched and deteriorated the supply chain further, without bringing any advantages to buyers,” said Gupta.

Intel will make an “initial investment” of more than 33 billion euros ($36.2 billion) to boost semiconductor manufacturing and R&D in France, Germany, Ireland, Italy, Poland and Spain, said the chipmaker Tuesday. The investment program “is centered around balancing the global semiconductor supply chain with a major expansion of Intel’s production capacities in Europe,” said Intel. The project's “initial phase” includes two “first-of-their-kind” semiconductor fabs in Magdeburg, Germany, it said. Planning the site will start immediately, with construction expected to begin in the first half of 2023 and production planned to come online in 2027, pending European Commission approval, it said. Ohio offered Intel $1.3 billion in “direct cash incentives” to entice the chipmaker to invest $20 billion to build two semiconductor fabs on a 1,000-acre campus just east of Columbus (see 2201280047).

The author of the House China package's trade title said a virtual conference committee has begun discussing a compromise between the House and Senate bills, but Russia's invasion of Ukraine makes it harder to find the time to make progress. There has been no public announcement that the chambers weren't going to use a formal conference committee, or that negotiations had begun. House Ways and Means Trade Subcommittee Chairman Earl Blumenauer, D-Ore., said during a Tuesday media call: "I think the overall impact of the Russian invasion has set everybody back on their heels and has affected everybody’s work plans." Another competing claim on Congress members' time, Blumenauer said, is the time needed to negotiate an agreement to fund the current fiscal year beyond continuing resolutions. A vote was expected on that bill Wednesday morning so House Democrats could leave at noon for a retreat, but Senate Republicans' insistence that new pandemic spending be paid for led to a revolt among House Democrats who represent states whose previous COVID-19 pandemic funding allocations were taken away to balance the books. Eventually, the vote went forward without the pandemic funding. President Joe Biden said in the State of the Union last week and members of his cabinet have been speaking publicly about how this compromise needs to get done in short order so the funds can flow to boost domestic chipmaking.

NXP Semiconductors employs about 100 engineers "based out of Russia," and it “serviced” about $25 million in revenue through its Russian distribution partners last year, Chief Financial Officer Bill Betz told a Morgan Stanley investment conference Monday. “So that's the direct exposure we have” to the crisis, he said. In terms of “indirect” exposure, NXP supplies chips to an automotive OEM in Ukraine that manufactures wire harnesses, said Betz. “They are shut down, paused for a couple of weeks” to find alternative sourcing, he said. NXP’s sourcing of neon used for lithography in semiconductor manufacturing “does not come from Ukraine,” said Betz. “We typically hold six to nine months' worth” of inventory in neon, he said: “So really, in the short term, no impact, but this is something that we are continuing to monitor very carefully, and we will adjust accordingly as we go forward.”

Nvidia thinks it has fared better than others navigating the chip crunch because it “realized quite quickly that this would be a supply-constrained world and that it would be with us for many years,” Chief Financial Officer Colette Kress told a Morgan Stanley investment conference Monday. “Our initial onset of thinking through our supply chain started very early in that COVID period of time,” she said. “Our focus was not just about the next quarters out, but we stopped and paused to think about what it would mean for years in the future.” Nvidia has “already procured what we need” for 2022, “and we have also engaged in procurement for things for the long term,” involving anything “from wafers to substrates,” she said. Nvidia expects that supply will improve “each quarter of this year,” she said.

Semiconductor lead times “remain extended” and “unchanged” from previous quarters and inventory in the channel “remains lean,” said Broadcom CEO Hock Tan on an earnings call Thursday for its fiscal Q1 ended Jan. 30. Broadcom’s hardware backlog at the end of the quarter was more than $25 billion compared with $22 billion the preceding quarter, said Chief Financial Officer Kirsten Spears. Lead times remained “steady” at 50 weeks, she said. Broadcom’s software backlog “continued to grow as well and ended the quarter at over $15 billion,” she said. “As a point of reference, software backlog was $13 billion a year ago.” The “nice thing” about Broadcom’s semiconductor business is that it draws 75% of its revenue from about 100 customers through direct sales, said Tan. “We have enough visibility on these customers” to be able to ship “to what exactly they need,” he said. Broadcom already has started booking 2023 orders, “given our lead times,” he said. He estimates the “trend demand increase” will average close to 20% year over year, he said. Asked how long he thinks the elevated demand trends will last, Tan said: “Who knows? It’s hard for me to figure, because I’ve been wrong so many times.”

Growth in chip demand continues to “outstrip increases in supply,” and as a result, “our delinquency has continued to grow,” said Marvell Technology CEO Matt Murphy on an earnings call Thursday for its fiscal Q3 ended Jan. 29. “We are working closely with our suppliers to secure additional capacity wherever possible.” Marvell has safety checks in place to be sure the heightened demand is authentic and not the result of customers trying to hoard product, said Murphy. “We have a very rigorous internal review process” that includes “very good end-market data,” he said. Marvell also has “a handful of major accounts that we go very deep with, and given the system-level nature of what we do, we have very good insight into what they're doing and what the needs are,” he said. Layered atop that is an “engagement model” with key customers, in which orders are “non-cancelable,” and “reschedules are limited,” he said. “We've gone through a process to make sure that as we schedule the backlog and we get bookings, it's actually what people want, and then we prioritize around that,” he said. One benefit of the semiconductor “crisis” is that it has brought leaders in the chip industry “even closer” to their OEM customers, he said. “My interactions all the way to the CEO level of our major customers is another way” to be sure the elevated demand is authentic, he said.

President Joe Biden intended to press Congress during his State of the Union speech Tuesday night to send a compromise bill marrying elements of the House-passed America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength Act (HR-4521) and Senate-passed U.S. Innovation and Competition Act (S-1260) to his desk as soon as possible, a White House official said in a Monday conference call with reporters. The House passed HR-4521 last month, but there has been no formal compromise between that measure and S-1260 (see 2202250054). Both U.S. tech competitiveness measures include $52 billion in subsidies to encourage U.S.-based semiconductor manufacturing (see 2201260062) but differ in other areas. Biden was expected to tout Intel’s plan to build two new chip factories in Ohio, for $20 billion (see 2201210027), during the speech, an administration official said. Intel CEO Pat Gelsinger and Facebook whistleblower Frances Haugen were to be among First Lady Jill Biden’s guests at the speech, the White House said. Biden was also expected to tout the $65 billion in broadband money included in the Infrastructure Investment and Jobs Act as a way to provide internet access “to every family in America,” a White House official said.

Differences in chips funding legislation in the House and Senate aren’t “irreconcilable” and are “worthy of discussion,” House Speaker Nancy Pelosi, D-Calif., said Friday during a news conference at the Lawrence Berkeley National Laboratory in California. She was referencing the House-passed America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength Act (HR-4521) (see 2202040054). Pelosi's office didn’t comment about timing and participants for the conference committee. “We are almost there,” said Rep. Doris Matsui, D-Calif. “We know what we already agree on, which is the majority of it, and there’s some little tweaks” and other differences. “There’s nothing there that’s going to be a deal stopper at all. ... This is going to get done.” The U.S. in 1990 had a 37% global share of semiconductor manufacturing capacity, which has fallen to 12% today, she noted. Since the bill was introduced, similar legislation has passed in Korea, Taiwan, Japan, India and Europe, said Intel CEO Pat Gelsinger: “They want the fabs built on their own soil.”

Himax Technologies, supplier of display driver chips and other semiconductor products to panel makers, has “rather limited” visibility into certain areas of consumer electronics, “with global consumption potentially impacted by the ongoing COVID-19 pandemic, port congestion, worldwide inflationary pressure and worries over geographical conflict,” said CEO Jordan Wu on a Q4 earnings call Thursday. In foundry capacity, “we expect the supply-demand imbalance to continue throughout 2022, especially on the mature nodes that we are primarily anchored to,” he said. Himax has continued "to pursue new partnerships and agreements to increase our available capacity and achieve our 2022 business goals,” he said. It signed contracts “with the vast majority of panel makers and, in some instances, select leading end customers, where they prepay or make a deposit to secure their long-term chip supply, which in turn also improves our business visibility,” he said. “Foreseeing the continuation of the prevailing foundry shortage and the demand for advanced displays to remain strong, we continue to move toward higher end markets.”