The U.S. tech supply chain is “more constrained” than previously thought, but consumer demand for tech goods “remains robust,” reported S&P Global Ratings Monday. It’s forecasting supply constraints “will ease only slightly” in 2022, “as capacity additions are not likely to make a significant difference” until late in the year. “Semiconductor production is becoming structurally more capital intensive because manufacturing at the leading edge nodes is more complex,” said S&P. “Industry and governments have a greater desire for regional diversity to mitigate geopolitical risk,” and that bodes well for “semiconductor capital equipment makers,” it said.
Advocates of reallocating the 12 GHz band for 5G are putting on a full-court press for FCC action as early as the February commission meeting. 5Gfor12GHz Coalition members said in interviews their strongest argument is that other than 2.5 GHz, nearly ready for auction, and 3.1-3.45, being looked at for reallocation, no other candidate bands are available for the “spectrum pipeline.” Proponents say action will likely have to wait for Senate confirmation action on FCC nominees and for the Office of Engineering and Technology to wrap up engineering work.
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Legislation introduced Friday would require large tech companies to prove their potential acquisitions of rivals aren’t anticompetitive. Senate Antitrust Subcommittee Chair Amy Klobuchar, D-Minn., and Sen. Tom Cotton, R-Ark., introduced the Platform Competition and Opportunity Act, as expected (see 2110250055). It would apply to companies with a market capitalization of $600 billion at enactment. The bill is a companion to legislation introduced by Democratic Caucus Chair Rep. Hakeem Jeffries, D-N.Y. (see 2106110070). Klobuchar previously introduced a bipartisan bill with Senate Judiciary Committee ranking member Chuck Grassley, R-Iowa, mirroring a House bill on self-preferencing. “With a bill like this in place, truly innovative ideas that are disruptive to the Big Tech status quo will have a chance to flourish,” said Public Knowledge Competition Policy Director Charlotte Slaimant about the latest bill. “The answer is to make clear that predatory behavior -- like Facebook’s acquisitions of Instagram and WhatsApp -- will no longer be tolerated,” said Public Citizen Competition Policy Advocate Alex Harman. “This legislation will do just that and is an important step towards reining in the power of these companies that believe they should be above the law.” Among the companies with $600 billion market cap are Microsoft, Apple, Alphabet, Amazon, Tesla, Meta, Nvidia and Taiwan Semiconductor Manufacturing.
The FTC approved a final order requiring Broadcom to “cease its anticompetitive behavior,” said the agency Thursday. The chipmaker “illegally monopolized markets” for semiconductors used to deliver TV and broadband internet services “through exclusive dealing and related conduct,” it said. The order prohibits Broadcom from signing certain types of “exclusivity or loyalty agreements” to supply customers with “key chips” for traditional broadcast set-tops and DSL and fiber broadband internet devices, said the FTC. “Broadcom also must stop conditioning access to or requiring favorable supply terms for these chips on customers committing to exclusivity or loyalty for the supply of related chips.” The order also bars Broadcom from retaliating against customers for doing business with its competitors. Broadcom didn’t respond to requests for comment.
Qorvo sees the industry "working through” chip shortages, even if the crunch forces 5G smartphone OEMs to leave some business on the table for calendar 2021, said CEO Bob Bruggeworth on a call Wednesday for fiscal Q2 ended Oct. 2. Chip shortages for tech devices are most acute in SoCs for MacBooks, not “RF front-ends” for 5G smartphones, “at least not from us,” said Bruggeworth, who chairs the Semiconductor Industry Association board. Chief Financial Officer Mark Murphy said the outlook for fiscal Q3 ending early January is for an 11% revenue decline sequentially even at the high end of guidance, reflecting “broad-based challenges in supply,” he said. “Our external supply chain is still recovering from disruptions in September, including shutdowns in Southeast Asia. Beyond that, select materials, products and production capacity remain tight.” In smartphones, “even where channel inventory for certain parts is healthy, customers lack silicon chips” to produce finished handsets, he said. “Given the supply and demand effects, we now see 5G smartphone volumes coming in below” the previously targeted 550 million handset shipments globally in calendar 2021, he said.
Qualcomm CEO Cristiano Amon had a relatively positive take on the semiconductor industry’s demand-supply imbalance when he said on a call Wednesday for fiscal Q4 ended Sept. 26 that the company expects “material improvements” to its supply by Dec. 31. He credited increases in capacity at Qualcomm’s suppliers, plus the company’s successful execution of its “second-sourcing initiatives.” Assurances of better supply are reflected in Qualcomm’s guidance for fiscal Q1 ending late December, he said. The company expects 16% sequential revenue growth at the high end of its guidance, plus 32% year-over-year revenue growth in its handset business. Android at the premium tier “is the primary growth driver in our handset business right now,” said the CEO. Like virtually all in the tech industry, Qualcomm in its September quarter endured supply constraints “really across the board,” said Chief Financial Officer Akash Palkhiwala. It’s conjecture “how the demand would have played out if there was supply across the industry, but we feel pretty comfortable that the overall supply picture is playing out exactly as we had planned,” he said. Qualcomm now has three parts that are “dual-sourced, that are available,” he said. There also are “capacity expansions with our suppliers that were previously being planned,” he said. The company continues to have “pockets” of the business in which “we would ship more, if we had more, but we see a lot of improvements,” said Amon. The industry will still face “some shortage” in calendar 2022's first half, “but as we get to the second part the year, in general, supply and demand are going to be aligned,” he said. The stock closed 12.7% higher Thursday at $156.11 after Qualcomm reported 56% year-on-year revenue growth in its handset business.
Members of five tech and business groups “raised concerns” about the “sensitive data” the Commerce Department seeks in its Sept. 24 request for information about risks in the semiconductor supply chain (see 2109230038), the associations wrote Commerce Secretary Gina Raimondo Wednesday. Members also worry “how the U.S. government intends to use the data it collects,” said the Computer and Communications Industry Association, the Information Technology Industry Council, the Security Industry Association, TechNet and the U.S. Chamber of Commerce. The RFI seeks especially sensitive information from chip companies and their partners upstream and downstream in the supply chain, including confidential sales and sourcing data, plus rundowns on order backlogs and an accounting of specific product shipments in the past month. The associations urge Commerce to treat the information submitted “with the sensitivity and anonymity necessary to avoid jeopardizing the dealings of any given business,” they told Raimondo. Much of the information requested also is “dynamic, with bottlenecks changing on a frequent basis, so we caution that the RFI may not yield information that presents an accurate picture of the semiconductor supply chain,” they said. They encourage Commerce “to consider the nature of this unique challenge and how the information requested through this RFI may unintentionally distort the realities of the semiconductor supply chain,” they said. “This underscores why the ongoing exchange of information and coordination between government and the private sector is vital.” Commerce didn’t comment. With RFI submissions due Monday in docket BIS-2021-0036, ITI, which took the lead in publicizing the letter, didn’t respond to questions about why the groups took more than a month to air their concerns publicly with Raimondo.
The White House is pressing Congress to pass legislation with $52 billion for U.S. chipmaking (see 2106090007), White House National Security Council Senior Director-International Economics and Competitiveness Peter Harrell told an AT&T livestream event Thursday. “The bigger picture is we’ve got to get the funding across the finish line,” he said. “Congress has to get the funding across the finish line, and we have to move on expanding capacity here at home and with our allies.”
The industry shipped more semiconductor units in Q3 than during any previous quarter on record, ramping up production to mitigate the global chips crunch, reported the Semiconductor Industry Association Monday. Global sales of $144.8 billion were up 27.6% year over year and 7.4% higher sequentially, said SIA. Year-over-year Q3 sales increased 33.5% in the Americas, and were up 32.3% in Europe, 27.2% in Asia Pacific, 24.5% in Japan and 24% in China, it said.