Semiconductor equipment supplier expects shortages to continue

  • Applied Materials, a supplier of equipment used in semiconductor manufacturing expects demand for parts will outstrip supply for the next several quarters despite declining sales of smartphones and other consumer devices, according to a Q3 earnings call.
  • The parts maker continues to work through a growing backlog of orders from consumers in the automotive and industrial sectors, among others. “Demand for Applied’s products is still higher than our ability to fulfill it and our backlog continues to grow,” said President and CEO on this month’s earnings call.
  • Applied Materials is starting to see incremental improvements in supply after making efforts to up manufacturing, CFO said on the call. He said that the company has “added significant investments in talent to our supply chain teams to resolve bottlenecks and to improve our inventory and overall output.”

Applied Materials is seeing sustained demand for semiconductors with more customers inking longer-term agreements in an effort to shore up supply, according to the President and CEO. The enhanced commitments are a result of multiple factors, including higher demand for electric vehicles and an overall push to localize the semiconductor supply chain.

The passage of the CHIPS and Science Act, which includes billions of dollars in subsidies to boost chip manufacturing, has spurred businesses to expand U.S. production. Qualcomm, for example, recently announced it would extend its agreement with semiconductor manufacturer GlobalFoundries to expand wafer capacity.

The bill will enable many companies to accelerate investments in manufacturing, the President and CEO said. Already, customers are providing Applied Materials with “longer-term visibility and commitments” as their clients attempt to “lock-in strategic capacity,” he added.

The move to nearshore supply chains is “something new for the industry,” the President and CEO said, adding that government incentives provide “a higher degree of certainty for these investments.” Automakers are also securing long-term capacity agreements to support their EV production goals as global demand skyrockets.

Applied Materials has worked with customers to improve visibility as part of its efforts to secure its supply chain and boost its manufacturing capability, the President and CEO said on a previous earnings call.

“We are confident that our business will be more resilient, thanks to strong pull for a uniquely enabling technology, our large backlog, longer-term visibility from our customers and industry-wide investment in a strategic regional capacity,” the President and CEO said on the Q3 call.

Source: Supply Chain Dive

NEOLink cooperated with our order processing system. He did not replace it or force solutions. Logfret did it better than other companies on the market – it adapted its system to ours. Logfret didn’t come to us saying, “We have this solution, and you either use it or we won’t cooperate.

Procurement Director

Pumps Manufacturer

We made a huge improvement in global visibility with a global platform—anyone can log into NEOLink and look at a shipment anytime, anywhere in the world. We wanted a freight forwarder with a good technology platform, which could handle the complexities of our business and we found NEOLink!

A global leader in performance materials and specialty chemicals

My suppliers have less or zero experience with international logistics. Thus, not able to create proper documentation which leads to tremendous delay. Thanks to Logfret who provide training to all suppliers and work with us to build up a consolidation hub to reduce transportation costs significantly.

One of the world’s leading designers, manufacturers and distributors of ride control products