The days of popular gadgets being perpetually out of stock and resold by scalpers at significant markups just got a step closer to meeting its unceremonious end.
Hon Hai Precision Industry, the biggest iPhone assembler and flagship unit of Foxconn, believes a major improvement in parts shortages will arrive in the first quarter of this year with “overall supply constraints” easing in the second half, according to James Wu, a spokesperson for the manufacturing company. The news was first reported by Bloomberg.
Supply shortages, particularly those for computer chips, have plagued countless companies across multiple industries. Everything from graphics cards and gaming consoles to cars and refrigerators has faced production delays, leading to an inability for companies to keep up with a demand that, in many cases, has skyrocketed during the pandemic.
Supply shortages won’t face an abrupt end across the semiconductor industry; rather, certain components will ramp up faster than others. While Foxconn claims some part shortages are nearing their finish line, power management chips relied on by just about everything we use are still in short supply, Hon Hai said. This could present a challenge for Apple, though CEO Tim Cook is still optimistic about getting supply closer to demand.
“We saw supply constraints across most of our products,” Cook said in an interview last month before Apple’s earnings call. “We’re forecasting that we will be less [constrained] in March than we were in the December quarter.”
Taiwan Semiconductor Manufacturing (TSMC), the foundry responsible for building Apple’s M1-series processors says chip supply will remain tight through this year. Other chipmakers have outlined similar timelines, with Intel’s CEO telling the Washington Post that the chip shortage for the auto industry could last into 2023. Intel rival AMD predicts shortages will ease in the second half of this year.
As Bloomberg points out, Ford and Toyota have recently warned customers and shareholders of continuing shortages affecting vehicle production. Ford this week suspended production in multiple assembly plants due to the semiconductor shortage, while its Japanese competitor gave a rather dire update.
“We don’t expect the imbalance in chip supplies to resolve quickly and the course of coronavirus pandemic is unclear,” a Toyota official told reporters. “We think that uncertainty will continue into the next business year.”
In response to these shortages, chipmakers have promised to invest billions of dollars in new plants. Intel is spending $20 billion on a new processor manufacturing facility outside Columbus, Ohio in what will be the “single largest private-sector investment in Ohio’s history.” For their part, Samsung is building a $17 billion chip factory in Texas, and TSMC and Sony are opening a $7 billion boundary in Japan at the end of 2024. TSMC also plans to open a $12 billion plan in Arizona to produce 5-nanometer technology.