China's SMIC has recently said that memory shortages are affecting broader supply chains, and the CEO said many customers are looking to scale back chip orders.
SMIC Claims That Ditching Chip Orders in Light of DRAM Shortages Isn't the Wise Move For Customers
DRAM has become one of the most important commodities in the AI world, given its rapid integration across AI architectures and end products. We have been witnessing shortages for several quarters now, and, apart from their impact on the client segment, large-scale foundries like SMIC are also seeing the effects. Talking about quarterly earnings, SMIC's co-CEO, Zhao Haijun, says that the ongoing memory supercycle has disrupted the supply chain, creating significant impacts on customers, particularly mobile and PC manufacturers.
Memory-related chips and power-related chips are currently in significant undersupply ... Now the industry is in this urgent crisis mode to race to secure memory.
We did see some channels and middle layers of the supply chain stockpile a lot of memory because they hope to sell them at a higher price in an undersupplied situation. ... These inventories could be released later when new capacity goes online later this year.
- SMIC's co-CEO
SMIC says the current situation in the memory industry is dramatic, yet it is also important for clients to note that suppliers are looking to add more capacity, and we could see meaningful increases in DRAM output by 2027. China's largest semiconductor foundry is urging customers not to scale back foundry orders, claiming that they might miss out on the opportunity when the memory supply becomes steadier, and by then, chip lines would've been fully booked.
Otherwise, if the demand bounces back and new memory capacity goes online in the third quarter, they won't have enough chips to make their products.
For foundries in particular, the biggest risk from DRAM shortages is that customers won't have the means to build end products if they are unable to source memory capacity. When TSMC's CEO was asked whether the company sees a threat from DRAM supply constraints, C.C. Wei said there isn't a risk in the short term, mainly because the company's largest mobile customer is Apple. It would be interesting to see how disruptive DRAM shortages become in the long term, as they pose a threat to several industries.
News Source: Nikkei Asia
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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