![]() The lower the ratio, the lesser the likelihood of new capacity or technology being added or implemented in the near future. The ratio is calculated by dividing a company’s capital expenses by its revenue generated annually (capex to sales). We use the capital intensity ratio as our base to measure a fab’s expansion for future business. Taking a closer look at the semiconductor capital investment trends during the past few years, it becomes clear that under-investment is the root cause of demand-supply imbalance, particularly in logic (non-memory) semiconductor industry.Ĭapex is the leading indicator of growth in the semiconductor industry. However, things are expected to change for the better, with 2021 heralding a big capex cycle that will still fall short of meeting the entire demand. Key reasons responsible for this supply shortage include under-investment in wafer capacity (especially in matured nodes of logic ICs) during 2015-2019, supply chain disruptions due to COVID-19 and geopolitical uncertainties, unexpected gadget demand for work from home (WFH), and improving visibility of emerging technology products such as AI/edge and EV. In fact, chipmakers believe this tightness in supply will not be resolved until the completion of inventory replenishment, with H2 2021 as the best-case scenario. Since the beginning of this year, the concern over shortage of semiconductor chips has spread across the global supply chains of the IT and automobile industries. A bottom-up analysis on chip supply shortage and Intel’s CPU outsourcing plan from equipment and capex perspectives ![]()
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