What’s the vicious cycle of chip shortage?

Semiconductor manufacturing equipment: key role in expanding chip production, The multiplier effect of semiconductor manufacturing equipment.
Chip Shortage

Table of Contents

Do we solve the semiconductor equipment shortage or semiconductor shortage first?

Global semiconductor supply imbalances hamper countless industries, including important sectors such as autos and healthcare, as well as workers and consumer electronics. Around the world, policymakers are ramping up semiconductor manufacturing capacity to strengthen supply chains and meet the rising demand for semiconductors through powerful incentive programs totaling hundreds of billions of dollars. This global effort to develop semiconductor manufacturing capacity depends on the production and installation of other semiconductor manufacturing equipment (SME). In short, without more semiconductor manufacturing equipment, there can be no additional capacity.

The chip shortage has increased lead times for fabs and other tools used to make complex semiconductors. Lead times for fab equipment ranged from three to six months through 2020, extending to an average of 10 months in the first quarter of 2021 and 14 months in July 2021. For some fabs, lead times exceed two years.

Securing the supply of chips needed for semiconductor manufacturing equipment, which can expand capacity without changing its allocation strategy, will significantly reduce lead times for fabs.

Semiconductor manufacturing equipment: key role in expanding chip production

Extended equipment lead times are hampering the expansion of fabs that already have room to expand capacity; In addition, delivery delays can seriously impede the expansion of material and process equipment suppliers, package and test providers, and their supply chains. According to SEMI, 86 new or major fab expansions are expected to come online between 2020 and 2024 (see Figure 1), with 200mm fab capacity growing by 20% and 300mm fab capacity growing by 44% during this period. But longer equipment delivery times mean planned chip production capacity is being ramped up more slowly, potentially prolonging the shortage.

Figure 1: Expansion of new 200mm and 300mm fabs from 2020 to 2024

The production of semiconductor manufacturing equipment relies on relatively small quantities of semiconductors, which are typically purchased by contract manufacturers from semiconductor manufacturing equipment OEM and integrated into semiconductor manufacturing equipment components. These chips, aimed at semiconductor manufacturing equipment OEM and contract manufacturers, account for well under 1 percent of the global semiconductor market. However, the chips needed for semiconductor manufacturing equipment are critical to increasing semiconductor capacity and meeting growing demand.

The immediate challenge of expanding the production of semiconductor manufacturing equipment is to ensure an adequate, timely, and reliable supply of semiconductors. In addition, silicon substrates are also important for semiconductor production. Wafer makers also rely on semiconductor manufacturing equipment, which also needs chips, to increase capacity. The industry calls for more capacity and must ensure that semiconductor manufacturing equipment OEM and contract manufacturers get the chips they need to build the tools that are critical for new fabs.

The multiplier effect of semiconductor manufacturing equipment

Importantly, while the percentage of semiconductors required to build semiconductor manufacturing equipment is very small, these tools are capable of producing large numbers of chips, equivalent to a multiplier effect of > 1,000 times. Semiconductor manufacturing equipment OEM requires a variety of numbers and types of semiconductor devices, such as field-programmable gate arrays (FPGA), power management IC (PMIC), sensors, microcontroller units (MCU), programmable logic devices (PLD), analog-to-digital converters, power amplifiers, and memory chips — all suitable for their different tools. The multiplier effect applies to all tools, some examples include:

A typical FPGA testing tool requires about 80 FPGA to build. However, the tester can test about 320,000 FPGAs per year — with a multiplier effect of about 4,000 times.

Process tools require about 100 FPGAs to build and can process 120 or more wafers per hour. Wafers pass through each tool multiple times in the manufacturing process, but the contribution of most tools to overall production is equivalent to at least 2 million devices per year — about 20,000 multiples.

Optical wafer inspection tools require about 100 high-performance computing (HPC) server chips to manufacture. Their multiplier effect can be about 30,000 times greater.

A typical MCU tester requires about 100 FPGAs to be manufactured, but the tool can test nearly 10 million MCUS in a year, with a multiplier effect of about 100,000 times.

MCU is one of the chips facing the most severe shortage. They are used in many key downstream industries including automotive. If we consider an example of using a 100,000-fold multiplier effect on the tester and extending it to the automotive supply chain, assuming that the number of MCUS required for vehicle manufacturing is about 100 per vehicle, then each tool/tester could enable enough MCUS to build 100,000 vehicles (see Figure 2).

Figure 2: Semiconductor manufacturing equipment chip multiplier effect on the automotive market

This MCU tester example demonstrates the powerful multiplier effect of ensuring an adequate supply of chips for semiconductor manufacturing equipment OEM and contract manufacturers. To increase capacity, the semiconductor industry needs more semiconductor manufacturing equipment. What’s more, automakers and companies in other industries rely on semiconductor manufacturing equipment for capacity growth. The production of billions of semiconductors and countless downstream devices that integrate semiconductors ultimately depends on a small number of chips used in semiconductor manufacturing equipment. All stakeholders in the semiconductor supply chain must help ensure an adequate supply of these chips so that semiconductor capacity can grow to meet future demand and strengthen the supply chain to avoid future shortages.


Semiconductor manufacturing equipment companies face daunting challenges in their efforts to fairly distribute chips to important industries such as automotive and healthcare, but raising awareness of the chip shortages faced by semiconductor manufacturing equipment OEMs is critical.

Without semiconductor manufacturing equipment, expanding fab capacity to achieve the larger semiconductor production required by countless downstream industries would be impossible. The payoff for prioritizing chips for semiconductor manufacturing equipment is huge. Shorter equipment delivery times will significantly increase semiconductor production capacity, helping to alleviate chip shortages and improve ROI.


DiskMFR Field Sales Manager - Leo

It’s Leo Zhi. He was born on August 1987. Major in Electronic Engineering & Business English, He is an Enthusiastic professional, a responsible person, and computer hardware & software literate. Proficient in NAND flash products for more than 10 years, critical thinking skills, outstanding leadership, excellent Teamwork, and interpersonal skills.  Understanding customer technical queries and issues, providing initial analysis and solutions. If you have any queries, Please feel free to let me know, Thanks

DiskMFR Free Sample Application
  • Still worried about storage product quality?
  • Current suppliers can’t provide perfect after-sales service

  • Get our free sample for testing now

Leave a Reply

Your email address will not be published. Required fields are marked *

thirteen − ten =

Please let us know what you require, and you will get our reply within 24 hours.

  • Our team will answer your inquiries within 24 hours.
  • Your information will be kept strictly confidential.

Let's Have A Chat

Learn How We Served 100+ Global Device Brands with our Products & Get Free Sample!!!

Email Popup Background 2