It’s a bit like the butterfly effect applied to electronics, or how the shortage of components in Chinese industry is causing frustration… among French gamers. For not having anticipated enough a demand that soared, console manufacturers quickly found themselves out of stock before Christmas. But the situation could now continue because of a succession of failures in the production chain. Dive into the ruthless and interdependent universe of the supply of electronic components …
As a reminder, Sony’s PS5 and Microsoft’s Xbox Series both use a main chip (SoC), a central component that concentrates all the computing power of the consoles. Without it, the manufacture of devices is totally seized up. Recognizing a “demand greater than what was anticipated”, Lisa Su, CEO of the American AMD, the sole supplier of the two console manufacturers, recently explained in an interview that everything was in place to “increase our production capacities to remedy “.
Problem: AMD is experiencing serious supply problems with its own subcontractor, the Taiwanese chip maker TSMC, which burns “wafers” or ultra-thin wafers that accommodate circuits, transistors and semiconductors. This sub-component itself depends on other micro-parts, including a currently rare commodity, the ABF substrate. Invented by a Japanese company, Ajinomoto Build-up Film, it’s its small trade name, consists of several layers of micro-circuits. It is above all a resin film that has become the essential electrical insulator in the processor industry.
It is found in all laptops, servers or even electronic systems in cars.
However, its Chinese manufacturers have not been able to keep up with global demand for several months. The Covid-19 health crisis having paralyzed Chinese industrial activity for several weeks …
As if this were not already complicated enough, this structural crisis is also accompanied by an economic shortage, linked to an American-Chinese standoff.
“The shortage affecting AMD is a collateral damage to the huge orders of chipsets by Huawei last year”, analyzes Laurent Le Pen, boss of Omate, a Chinese manufacturer of connected watches which also suffers from this lack of components. Concretely, “the United States banned the Taiwanese TSMC from supplying new processors to Huawei from last September. Before this deadline, the Chinese manufacturer therefore urgently ordered millions of units and monopolized the production lines during the summer to the detriment of other customers. »And dried up the flow of other essential components.
Then, when he could no longer use TSMC, Huawei turned to other Chinese chip makers in the fall. “This has exploded the demand for components, such as the ABF substrate, the prices of which have soared by 30 to 50% on certain processors”, explains this expatriate in Shenzhen, the world capital of electronic components.
“The prices of these components have recently increased a lot, this indicates a worrying lack of availability”, confirms the marketing director of a Chinese manufacturer of smartphones.
Suppliers, subcontractors and electronics heavyweights have therefore been engaged in an economic war for weeks with millions of dollars in orders and overbids. With the ultimate domino effect of preventing, for at least several more months, Sony and Microsoft from building up stocks of PS5 and Xbox Series to meet the impatience of their tens of millions of customers around the world.