The House and Senate should take "immediate action" to reconcile their China competition bills and authorize funding for the Creating Helpful Incentives to Produce Semiconductors Act and other domestic semiconductor sector investments by sending the combined legislation to President Joe Biden, more than 20 tech, automotive and business groups wrote congressional leadership Wednesday. The Business Roundtable signed the letter, as did CTIA, the Information Technology Industry Council, the Semiconductor Industry Association, the U.S. Chamber of Commerce and others. A prolonged negotiation on a compromise bill “risks placing our country further behind in the competition for economic growth, supply chain resilience, technology leadership, and strengthened national security,” said the groups. “We urge immediate action to commence negotiations and work towards a final compromise bill that can swiftly pass both chambers and send this vital legislation to the president’s desk.” House Democrats should allow an official score from the Congressional Budget Office on the chips legislation before it advances further, House Budget Committee ranking member Jason Smith, R-Mo., and House Science Committee ranking member Frank Lucas, R-Okla., wrote Wednesday. House Democrats have passed more than $7.5 trillion of new spending since President Joe Biden took office, they wrote. “It’s irresponsible to proceed without knowing the true costs of this legislation,” said Lucas.

Q4 revenue at China’s largest chipmaker, Semiconductor Manufacturing International Corp., jumped 61.1% year over year to $1.58 billion, and its quarterly profit increased 212.7% to $552.8 million, despite being added to the Commerce Department’s entity list in December 2020 (see 2012180026), reported the company Thursday. It was an “exceptional year in SMIC's development history,” it said. The global shortage of chips and the strong demand for “local and indigenous manufacturing” brought SMIC “a rare opportunity,” while the U.S. export restrictions of the entity list “set many obstacles to the Company's development,” it said.

Demand "far outpaced" the capacity improvements and increased shipments that Microchip Technology achieved in fiscal Q3 ended Dec. 31, said CEO Ganesh Moorthy on a quarterly call Thursday. Microchip draws most of its revenue from sales of microcontrollers for a wide range of consumer and industrial tech applications. Its “unsupported backlog,” defined as undeliverable orders from customers unprotected by long-term supply agreements climbed significantly, compared with the unsupported backlog exiting the September quarter, he said. Despite 30% year-over-year revenue growth to $1.76 billion, “we exited the December quarter with the highest unsupported backlog ever,” said Moorthy: “We continue to experience constraints in all our internal and external factories and their related manufacturing supply chains. ... We continue to ramp our internal factories as fast as possible, and we are working closely with our supply chain partners to provide wafer foundry, assembly, test and materials to secure additional capacity wherever possible.” But judging from the magnitude of the current demand-supply imbalance, plus “the rate at which we are able to bring on new capacity, we continue to expect that we will remain supply-constrained throughout 2022 and possibly beyond that,” said the CEO. After five quarters of the semiconductor crunch and now into the sixth, “there is really no line of sight to having demand/supply coming back into some form of equilibrium,” he said.

Qorvo's semiconductor shortages moderated in fiscal Q1 ended Jan. 1, “and we expect the supply environment to continue to improve through this quarter and the calendar year,” said Chief Financial Officer Mark Murphy on an earnings call Wednesday. “We are still seeing some chipset shortages in Wi-Fi, which impacted that business.” Qorvo expects its mobile revenue in fiscal Q2 will be “flat sequentially and up around 5% year over year on flagship and mass tier phone launches and content gains and a more stable supply demand situation,” he said. The company doesn’t worry that the chip crunch will crimp 5G smartphone growth this year, said Eric Creviston, president-mobile products. “To the extent that there are chipset constraints in the modem side of the business, I would assume those suppliers are going to prioritize 5G,” he said. “So we doubt that’s going to be a major factor.”

Semiconductor supply availability at Nokia “continues tight,” said CEO Pekka Lundmark on a Q4 call Wednesday. “There are still going to be, at least in the first half of this year, situations where people live more or less hand to mouth.” Nokia finished 2021 with 3% “top-line growth” over 2022, he said. “That growth could have been a bit higher, had there been more components -- semiconductors especially.” The chip crunch caused a “revenue shift” from the second half of 2021 to 2022, he said. “We are not out of the woods yet. We have managed this very challenging situation very well without any major casualties or any major customer losses.” But the situation “calls for continuous day-to-day management,” he said. Nokia American depositary receipts closed down 4.2% Thursday at $5.72.

The world’s top 10 semiconductor buyers increased their 2021 spending by 25.2% over 2020, reported Gartner Tuesday. The top 10 OEMs generated more than 42% of total market spending, it said. Apple, with 11.7% share of spending, and Samsung (7.8%) remained the top two buyers for 2021, while Lenovo took the No. 3 spot, said Gartner. BBK Electronics and Dell Technologies rounded out the top five. Huawei, with the No. 3 share in 2020, fell to No. 7, as it “struggled to buy chips” amid the Commerce Department’s export control restrictions, said Gartner. The semiconductor shortage prevented OEMs from meeting full production of vehicles and various electronic devices, but also significantly increased selling prices, “which meant OEMs spent much more on semiconductor procurement in 2021 than in prior years,” it said. Gartner estimates average selling prices of semiconductor chips increased 15% or more in 2021. “The semiconductor shortage also accelerated OEMs’ double booking and panic buying, causing a huge spike in their semiconductor spending,” said Gartner.

Cirrus Logic’s 13% year-over-year revenue growth to $548.3 million in fiscal Q3 ended Dec. 25 -- $18.3 million above the top end of its Nov. 1 guidance range -- was generated from higher shipments of high-performance mixed-signal components for smartphones, but “we undoubtedly could have shipped more if we’d been able to obtain more wafers,” said CEO John Forsyth on a Monday investor call: “Most of the semi industry has seen that over the past year.” The “unmet demand” for chips “has been fairly resilient,” he said. “So as wafer supply frees up, we’re hopefully able to take advantage of some of that.” Apple is known to be Cirrus Logic’s largest smartphone customer. Cirrus Logic has immediate ambitions to supply audio and haptic components for gaming devices, said Forsyth: "The particular gaming product that we have in mind -- it’s not public that we’re in it yet, but it’s imminent."

Intel “will defer specific details to our local partners” in Ohio, emailed an Intel spokesperson Friday when asked about the performance-based commitments the chipmaker made to accept Ohio's offer of $1.29 billion in direct cash incentives to build two advanced-node semiconductor fabs for $20 billion on a 1,000-acre campus just east of Columbus (see 2201280047). “We expect the total value of incentives will be consistent with the nature and magnitude of the project, and with incentive packages available from other competitive states,” said the spokesperson. “The incentives will include investment and training grants, tax credits and exemptions available to entities with large projects, as well as infrastructure improvements that will benefit others in the region beyond Intel.” (We haven't asked Intel about the nature of the incentives, just what Intel had agreed to as the conditions for them.) The chipmaker's initial investment of "at least $20B, and our potential investment of up to $100B over the next decade, will have a major positive impact on Ohio and its residents,” said the spokesperson. Intel CEO Pat Gelsinger said Jan. 21 that the Licking County, Ohio, site can accommodate up to eight semiconductor fabs, of which Intel was announcing just the first two. The Ohio Department of Development said in a briefing Friday that the incentives offered to Intel include $600 million in cash grants directly payable to the company for defraying the 20%-30% higher incremental costs of building the fabs in the U.S., compared with the costs of building them in Asia, plus $691 million for local infrastructure upgrades and a new water reclamation facility. Intel also would qualify for $650 million in job creation tax credits over 30 years, said the department. Most of the incentive terms in the offer are performance-based, but the department wouldn't identify the performance criteria or how it will benchmark Intel's performance against those parameters.

The latest COVID-19 surges further exacerbated the chip crunch, but labor shortages are a bigger concern, said IDC Thursday. Uneven shortages and tight supply will drag on through 2022's first half as the industry builds up inventory to more normalized levels, it said. Automotive chip shortages have driven up the average selling price of vehicles, but supply should gradually improve through the second half, said analyst Nina Turner. The automotive market will begin to improve toward the end of this year and into 2023 “if there are no other supply chain shocks,” she said. Mature process nodes at 40 nanometers not only hit the automotive semiconductor market hard but also LCD drivers, power management ICs, power, auto ICs and microcontrollers, IDC said. The research firm estimates two-thirds of semiconductors were manufactured at mature process nodes in 2021 using largely depreciated assets that resulted in lower average selling prices compared with leading edge process nodes 16nm or under. Semiconductors using leading edge manufacturing are 15% of the semiconductor wafer volume, 44% of the revenue, leading companies to focus capital spending on that segment of the foundry market with only limited investment in mature process technology manufacturing, said the company.

Lead times for most Texas Instruments semiconductor products “remained stable” in Q4, but “hotspots continue to exist,” said Dave Pahl, vice president and head-investor relations, on a Tuesday earnings call. “Customers continue to be selective in their expedite requests, increasingly focusing on products that complete a matched set rather than expediting products across the board,” said Pahl. Though there’s a “growing recognition” that the near-term supply and demand “imbalance” will end at some point, “the secular growth of semiconductor content per system will continue to increase, and this requires a robust manufacturing capacity road map for 2025 and beyond,” he said. Customers are expressing “a high level of interest” in TI’s commitment to expanding its internal manufacturing capacity, including its plans, announced Nov. 17, for a multi-fab site in Sherman, Texas, he said. The North Texas site can accommodate up to four fabs long-term, with construction of the first two 300-millimeter wafer fabs expected to begin in 2022. TI finished Q4 with 116 days of inventory, four days higher than at the end of Q3, “still well below where we want to be,” said Chief Financial Officer Rafael Lizardi. TI’s guidance is to finish Q1 with 130-190 days of inventory, he said: “The bottom line is that we want to have more inventory.”