The global semiconductor shortage has led a major industrial conglomerate to resort to buying up old washing machines and removing chips from inside for use in their own products, according to the head of a supplier of key technologies to chipmakers.
Peter Wennink, the CEO of ASML, a company that dominates the global market for machines used to etch circuits into silicon wafers, made the remarks in an April 20 earnings call, without identifying by name the conglomerate that was scavenging chips from washing machines.
Wennink said ASML had a record year in terms of sales and profit and was facing “unprecedented customer demand” across all sectors, including for its lithography machines that function as a kind of printing press for silicon chips.
“With this unprecedented demand exceeding our capacity, we are ramping our output capability to meet the strong demand,” Wennink said, acknowledging challenges like labor force constraints and the vulnerability of operating at full steam.
“We are even more vulnerable when running at maximum capacity as there’s little room for recovery when things don’t turn out as planned,” he said, adding that ASML went on a major hiring spree last year though many of the new hires still have to be fully trained.
Like the chipmakers it supplies, ASML is also having to work through its own equipment and component shortages and COVID-related supply chain disruptions, Wennink said.
“All of what I just mentioned needs maximum attention and monitoring, creativity and flexibility of all our partners and stakeholders,” he said, adding that some testing of ASML equipment was being downstreamed to customer sites, which frees up additional production capacity.
Wennink told Financial Times in an interview in March that chipmakers’ multibillion-dollar expansion plans will be constrained by shortages of key equipment over the next two years as the supply chain struggles to accelerate production.
Surging demand for semiconductors has exposed supply chain kinks, prompting a historic wave of investment and unlocking government subsidies.
“It took 50 years to become a half-a-trillion-dollar industry. It’ll take just eight to 10 years to reach a trillion dollars,” Tom Caulfield, chief executive of GlobalFoundries Inc., one of the world’s largest semiconductor manufacturers, told The Wall Street Journal in a recent interview.
In telling the anecdote about the unnamed major industrial company that he said was buying old washing machines in order to salvage the chips in them, Wennink said the story was not unique, illustrating the desperation on the part of chipmakers to meet demand.
Wennink also said on the earnings call that utilisation rates of ASML’s machines were at all-time highs, suggesting that customers are buying more not to stockpile but because they can’t keep up with surging demand.
“We’re just looking at the data points, they just point to a market that is significantly short of semiconductor manufacturing capacity. This year and next year,” he said.
Intel, which relies on ASML’s lithography equipment, told Financial Times there’s still time to resolve the shortage of the lithography machines. That’s because it takes two years to build the shell of a chip factory and ASML’s machines won’t be needed until year three or four, Pat Gelsinger, chief executive of Intel, told the outlet.
But while Wennink told Financial Times there’s still some time to expand capacity, it’s not a simple task because of long lead times for key components, like lenses, that are needed to make the machines.
ASML shares were up around 1 percent at $649.50 at 7:30 a.m. New York time.