Unprecedented Demand or a Broken Industry?

It’s launch day for the next generation Xbox and one of the few purchases this year that I might get on release. This got me thinking, with all the new technology launching in the last few months that has been met with seeming supply shortages. Are we in a period of unprecedented demand or is this a sign of a deeper problem, is the semiconductor industry broken?

I want to state that this is an opinion piece, I have no detailed knowledge of supply chains or insight into why we are seeing such delays. This is just a collection of my thoughts and observations along with a little information gleaned from the internet.

Multiple Failed Launches

For me as a consumer I consider most of the technology launches of 2020 to be failures. This is the first year I can remember when I have been unable to buy a new Nvidia GPU on launch. Going back to the 900 series in 2014, I have been able to place an order and receive my card at launch. Not for the RTX 3000 series.

Despite all efforts I, like thousands of other people, was unable to secure an order for an RTX 3090 GPU at launch. By the time my order was received I was already nearly 500 in the queue and I was unlikely to receive stock allocation until late December, if at all this year.

If this were a one-off occurrence then I could understand, 2020 has been hard for supply chain and manufacturing. A global pandemic is not something anyone could have expected. However, this is not a one off, the same situation occurred for millions of consumers for products like the Xbox Series X, PlayStation 5, AMD Ryzen 5000 CPU and I fully expect the new AMD Radeon 6000 GPUs to be the same.

To a lesser extent there were also shortages in the Apple ecosystem as well, the new iPad Air 4 was announced around a month before it hit stores, only to be in short supply. The iPhone 12 Pro Max is also delayed from the rest of the 12 series launch.

All our chips in one foundry

Most of the products I have mentioned all have one thing in common, TSMC (Taiwan Semiconductor Manufacturing Company). Nvidia as far as I am aware are getting the RTX 30 series silicon from Samsung, but that comes with its own set of problems from what I have read.

Now I am not blaming TSMC here, they aren’t in control of their customers launch schedules. However, it is sensible to ask, are we now too reliant on the output of one company? Or is it a feature of a market where it is more important to get a product launch on paper than it is to get goods in the customers hands?

Perhaps the shortages are artificial to build hype around a product ensuring its success? As a consumer I hope not, the disappointment of not being able to build a new system or play a new console for months after release is huge.

It is a given that TSMC now hold a lead, with their 7nm production process being mature and 5nm process nodes churning out Apple Silicon day and night. It is hard to see how anyone competes here. Is that a reason to just accept this as the status quo?

Is there a solution?

I think there is room for more players here, demand of chips of all types is only going to grow, we need more output capacity. Who could step in to fill that gap? Few companies have the money to take on a task like this, the current situation over at Intel and their lack of competing process nodes shows that this isn’t for the faint of heart.

Apple could branch out, the move into using their own silicon in the Mac range along with all the existing products surely gives them enough demand to bring that in house. The cloud hyper scalers could potentially get into this game as well. AWS Nitro and Graviton are growing in popularity and the market for distributed processing is heating up.

What about Nvidia? With the potential acquisition of ARM and their own business in both consumer GPU and enterprise AI/ML processing, the demand for silicon is high. But is it enough to justify what would most certainly be billions of dollars in setup?

Maybe the real solution is for companies to stop with the paper launches and hype trains. Bring the products to market when you know you can meet the expected demand. Deliveries of a few hundred GPUs or CPUs a week to meet back orders into the thousands just isn’t going to cut it.

Or perhaps I’m just bitter that I couldn’t get my hands on a new GPU, CPU and PS5. I’m still set on building a new system, it might just have to wait until next year, hopefully given enough time supply can catch up with demand. Until the next big release cycle that is!

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Jason

Jason Benedicic is an independent IT consultant that primarly works with Data Centre space. He has extensive experience in Flexpod, cloud technologies and infrastructure as code. He is a member of NetApp A-Team, Cisco Champions and vExpert advocacy programs. He enjoys gaming and motorsport.