This obscure Taiwanese firm's 1,219% rise shows profit, pain of chip crisis
Nan Ya Printed Circuit Board Corp. is hardly a household name in
the tech industry. But the obscure Taiwanese company makes an essential
component for chipmaking that has become the latest bottleneck for automakers
and electronics companies suffering from semiconductor shortages.
The component goes by the unwieldy name of Ajinomoto build-up film
(ABF) substrate and it’s one of the least glamorous niches in the chips
industry. It’s part of the packaging that protects the handful of chips needed
to power your computer or car and allows communication among them.
Many of the world’s most advanced semiconductors can’t run without
the substrates. So while giants like Intel Corp. and Taiwan Semiconductor Manufacturing
Co. spend hundreds of billions trying to alleviate chip shortages, the lack of
that single component could hinder production for years. Supplies are likely to
remain constrained until at least 2025 due to limited capacity, according to
people familiar with the matter.
Top executives from Intel, Nvidia Corp. and
Advanced Micro Devices Inc. have all warned about shortages in recent months.
Broadcom Corp. recently told customers the lead time for its main router chips
is going up from 63 weeks to 70 weeks due to a lack of substrates, according to
one person, who asked not to be named as the information is not public.
The crunch shows how vulnerable global supply chains remain to
disruptions almost two years into the Covid-19 pandemic. Companies and
investors have almost no visibility into where the next shock could come from.
“This crisis caught a number players off guard,” said Peter
Hanbury, a partner at Bain & Co. “As demand for PCs, gaming cards and cloud
services increased with Covid-19 and working from home, this critical component
suddenly became a real bottleneck for many players such as AMD and Nvidia.”
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