Unlike foundries' capacity constraints impacting mainly automotive MCUs, assembly capacity constraints impact all semiconductor types including sensors, power supplies, and discretes, IHS said in its recent report.
Assembly and test locations are concentrated in China, South Korea, Japan, Singapore, Philippines, Indonesia, Thailand, Vietnam, and Malaysia. With the exception of Singapore and Malaysia, the vaccination rates are reported to be less than 6% for many of these countries, according to the Center for Strategic and International Studies. Malaysia has been shut down due to COVID-19 outbreaks recently and its vaccination rate is almost 12%. Several of these countries have seen their average infections increase over the past two weeks, and the ongoing threat of COVID-19 impacting labor forces in other countries is real. This threatens the operators at the assembly and test locations themselves as well as the workers necessary to move the finished products to distribution hubs for global distribution, IHS noted.
Like wafer fab capacity, there is a need for expanded packaging capacity. However, the margins in assembly and test are a fraction of those in wafer fabs, so there is more hesitation to add capacity speculatively, IHS indicated.
There also is a shortage of assembly equipment, with some lead times increasing to 40 weeks, IHS continued. One of the main reasons the lead times for this equipment has increased is because they cannot get semiconductors. In short, the equipment needed to make more semiconductors has limited availability because they cannot get enough semiconductors, IHS said.
As result, IHS expects the semiconductor shortages across the automotive sector now extending into the first quarter of 2022 and possibly into the second quarter. Both Intel and Infineon have cautioned that the situation may persist throughout all of 2022. So while improvements in wafer capacity have improved, the situation is still fraught with challenges, IHS said.
IHS forecast that light vehicle production worldwide will reach 80.78 million units in 2021. This represents an 8.3% increase over 2020 levels.
"Output lost to disruption to the semiconductor supply chain is estimated to have reached 1.44 million units in Q1 and 2.60 million units in Q2. Visible downtime in Q3 now stands at 1.60 million units underlining the assessment that Q3 will continue to see disruption, and this is becoming more significant," said Mark Fulthorpe, executive director of global light vehicle forecasting for IHS Markit. "While we do not expect to see levels of disruption like those in Q2, it now seems highly likely that the impact will be in the range of 1.8 to 2.1 million units for the quarter if the rate of downtime that we currently see was to continue through September."
Fulthorpe continued "Q2 2022 may be the point at which we look for the stabilization of supply, with recovery efforts now starting only from H2 2022."
"Across the full year, taking the estimates for Q3 and Q4, in addition to the losses already identified in the first half of the year, this would put the full-year risk associated with semiconductor shortages between 6.3 million to 7.1 million units globally," Fulthorpe noted.