The electronics industry is experiencing a shortage of chip manufacturing capacity and many automobile manufacturers as now being forced to close their factories for a lack of key components. At the same time many of those chip companies rely on relatively few foundry chipmakers having gone fab-lite in previous decades.

Japan’s Renesas has asked its customers to pay more for power management chips and microcontrollers, Nikkei reported. It said the price hike for automotive customers would be several percent while computing and industrial equipment customers would be asked to pay 10 to 20 percent more on average. The report added that Toshiba has also started negotiations on price rises.

NXP and ST have also demanded clients pay 10 to 20 percent more, the report said referencing unnamed sources.

“The semiconductor industry has outsourced certain processes to a very limited number of foundries, and this is very much a structural issue,” Nikkei quoted Hidetoshi Shibata, CEO of Renesas Electronics, as saying at an event in Tokyo on Friday, January 22. “Factors such as ups and downs of automobile production have given a final blow, and I would like to start discussing with automobile customers what kind of initiatives are needed.”

Given that wafer fabs are running at close to full production capacity and it can take two or three years to create and approve a wafer fab there is little scope for any additional capacity before 2022. The obvious way for the market to bring demand back into line with supply is therefore to raise prices and this rising trend for ASPs has been predicted (see V-shaped pandemic sets up chip shortages, rising prices in 2021).

Related links and articles:

V-shaped pandemic sets up chip shortages, rising prices in 2021

Volkswagen faces massive chip shortages

Huawei is hurrying to build a wafer fab

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