A New York Times investigation has alleged that Russia has turned Japan into a key hub for espionage, covert procurement, and the sourcing of critical technology used in the Russia-Ukraine war. The report claims Russian intelligence officers operating under diplomatic and commercial cover have exploited Japan's relatively weak espionage laws to acquire sensitive components. Japan has acknowledged the need to strengthen its intelligence and counter-espionage capabilities, with Parliament approving a new national intelligence coordination body. The report also alleges that procurement networks routed military-use technology through intermediary countries to bypass export controls.

Japan tightens intelligence network after the NYT exposes alleged Russian spy operations

In a bid to cut China's access to chip technology, the United States plans to limit the sale of US-made microchips to Beijing. WION tells you more in this report.

World Business Watch: Washington plans to limit sale of US-made microchips to China

Since 1989, Microchip Technology has operated in an unglamorous backwater of the electronics industry, making chips called microcontrollers that add computing power to cars, industrial equipment and many other products.

Now a global chip shortage has elevated the company’s profile. Demand for Microchip’s products is running more than 50% higher than it can supply. That has put the company, based in Chandler, Arizona, in an unfamiliar position of power, which it began wielding this year.

While Microchip normally lets customers cancel a chip order within 90 days of delivery, it began offering shipment priority to clients that signed contracts for 12 months of orders that couldn’t be revoked or rescheduled. These commitments reduced the chances that orders would evaporate when the scarcity ended, giving Microchip more confidence to safely hire workers and buy costly equipment to increase production.

“It gives us the ability to not hold back,” said Ganesh Moorthy, president and CEO of Microchip, which Thursday reported that profit in the latest quarter tripled and that sales rose 26% to $1.65 billion.

Such contracts are just one example of how the $500 billion chip industry is changing because of the silicon shortage, with many of the shifts likely to outlive the pandemic-fueled dearth. The lack of the tiny components — which has pinched makers of cars, game consoles, medical devices and many other goods — has been a stark reminder of the foundational nature of chips, which act as the brains of computers and other products.

Chief among the changes is a long-term shift in market power from chip buyers to sellers, particularly those that own factories that make the semiconductors. The most visible beneficiaries have been giant chip manufacturers like Taiwan Semiconductor Manufacturing Co., which offer services called foundries that build chips for other companies.

But the shortage has also sharply bolstered the influence of lesser-known chip makers such as Microchip, NXP Semiconductors, STMicroelectronics, Onsemi and Infineon, which design and sell thousands of chip varieties to thousands of customers. These companies, which build many products in their own aging factories, now are increasingly able to choose which customers get how many of their scarce chips.

Many are favoring buyers who act more like partners, by taking steps like signing long-term purchase commitments or investing to help chip makers increase production. Above all, the chip makers are asking clients to share more information earlier about which chips they will need, which helps guide decisions about how to lift manufacturing.

“That visibility is what we need,” said Hassane El-Khoury, CEO of chip maker Onsemi, a company previously known as ON Semiconductor.

Many of the chip makers said they were using their new power with restraint, helping customers avoid problems like factory shutdowns and raising prices modestly. That’s because gouging customers, they said, could cause bad blood that would hurt sales when shortages end.

Even so, the power shift has been unmistakable. “Today there is no leverage” for buyers, said Mark Adams, CEO of Smart Global Holdings, a major user of memory chips.

Marvell Technology, a Silicon Valley company that designs chips and outsources the manufacturing, has experienced the change in power. While it used to give foundries estimates of its chip production needs for 12 months, it began providing them with five-year forecasts starting in April.

“You need a really good story,” said Matt Murphy, Marvell’s CEO. “Ultimately the supply chain is going to allocate to who they think are going to be the winners.”

It’s a substantial change in psychology for a mature industry where growth has generally been slow. Many chip makers for years sold largely interchangeable products and often struggled to keep their factories running profitably, particularly if sales slumped for items like personal computers and smartphones that drove most chip demand.

But the components are essential for more products now, one of many signs that rapid growth may linger. In the third quarter, total chip sales surged nearly 28% to $144.8 billion, the Semiconductor Industry Association said.

Years of industry consolidation has also wrung out excess manufacturing capacity and left fewer suppliers selling exclusive kinds of chips. So buyers that could once place and cancel orders with little notice — and play one chip maker off another to get lower prices — have less muscle.

One effect of these changes was to make chip factories more valuable, including some older ones owned by foundries. That’s because new manufacturing processes have become so costly that some chip designers aren’t shifting to the most advanced factories to make their products. The result has been a demand crunch for less-expensive production lines that are 5-10 years old.

So some foundries, in a major strategy shift, are beginning to put more money into older production technology. TSMC recently said it would build such a plant in Japan. Samsung Electronics, a key foundry rival, has also said it was considering a new “legacy” factory.

But those investments will take several years to pay off. And they won’t address issues affecting chips like microcontrollers, which are a microcosm for the supply chain squeeze.

Microcontrollers combine the ability to make calculations with built-in memory to store programs and data, often adding features that only come from specialized factories. And the number of applications is skyrocketing, from brake and engine systems in cars to security cameras, credit cards, electric scooters and drones.

“We’ve probably sold more microcontrollers in the past year than the past decade,” said Marc Barnhill, chief trading officer at Smith, a chip distributor based in Houston. The wait to receive some popular microcontrollers now stretches to more than a year, he said, and prices for the products have leapt 20-fold among traders that buy and sell chips.

Amid the turmoil, companies that design or use chips have responded with new tactics. Some designers are adapting their products to be made in different factories with more manufacturing capacity, said Shiv Tasker, a global vice president engaged in that practice for the consultancy Capgemini.

And customers that once bought chips based on price and performance also are thinking more about availability.

Consider BrightAI, a startup developing devices and software to help businesses connect equipment and other devices to the internet. Alex Hawkinson, its co-founder, said it redesigned one circuit board four times in six months to adapt to different chips. The company also transferred some designers to China to revise products more quickly with components obtained there, he said.

Bigger chip users like automakers have started talking directly with manufacturers, rather than following the typical practice of working through subcontractors. Last month, General Motors forged a deal with the chip maker Wolfspeed to ensure a share of the semiconductors coming from a new factory that makes energy-efficient components for electric vehicles.

While the chip industry’s power shift has aided Microchip, it has also come with its own headaches. Moorthy said the company had managed to produce more chips in its three main factories in Arizona and Oregon, as well as get more from foundry partners. But demand is growing faster than what it can produce.

“We are falling farther behind,” he said.

Expanding Microchip’s own plants isn’t easy. For one thing, the company has always relied heavily on buying used manufacturing equipment, but “that whole thing has dried up,” Moorthy said.

Acquiring new gear can take 12-18 months and costs more, he said. While the long-term purchase agreements have provided more stability to make such investments, Microchip and others also hope Congress approves a $52 billion funding package, which is expected to include grants to subsidize more U.S. chip production.

“Are we counting on it to run our business? No,” said Moorthy. “Would it help some of our investment choices? Absolutely.”

Since 1989, Microchip Technology has operated in an unglamorous backwater of the electronics industry, making chips called microcontrollers that add computing power to cars, industrial equipment and many other products.

Since 1989, Microchip Technology has operated in an unglamorous backwater of the electronics industry, making chips called microcontrollers that add computing power to cars, industrial equipment and many other products. Now a global chip shortage has elevated the company’s profile. Demand for Microchip’s products is running more than 50% higher than it can supply. That has put the company, based in Chandler, Arizona, in an unfamiliar position of power, which it began wielding this year. While Microchip normally lets customers cancel a chip order within 90 days of delivery, it began offering shipment priority to clients that signed contracts for 12 months of orders that couldn’t be revoked or rescheduled. These commitments reduced the chances that orders would evaporate when the scarcity ended, giving Microchip more confidence to safely hire workers and buy costly equipment to increase production. “It gives us the ability to not hold back,” said Ganesh Moorthy, president and CEO of Microchip, which Thursday reported that profit in the latest quarter tripled and that sales rose 26% to $1.65 billion. Such contracts are just one example of how the $500 billion chip industry is changing because of the silicon shortage, with many of the shifts likely to outlive the pandemic-fueled dearth. The lack of the tiny components — which has pinched makers of cars, game consoles, medical devices and many other goods — has been a stark reminder of the foundational nature of chips, which act as the brains of computers and other products. Chief among the changes is a long-term shift in market power from chip buyers to sellers, particularly those that own factories that make the semiconductors. The most visible beneficiaries have been giant chip manufacturers like Taiwan Semiconductor Manufacturing Co., which offer services called foundries that build chips for other companies. But the shortage has also sharply bolstered the influence of lesser-known chip makers such as Microchip, NXP Semiconductors, STMicroelectronics, Onsemi and Infineon, which design and sell thousands of chip varieties to thousands of customers. These companies, which build many products in their own aging factories, now are increasingly able to choose which customers get how many of their scarce chips. Many are favoring buyers who act more like partners, by taking steps like signing long-term purchase commitments or investing to help chip makers increase production. Above all, the chip makers are asking clients to share more information earlier about which chips they will need, which helps guide decisions about how to lift manufacturing. “That visibility is what we need,” said Hassane El-Khoury, CEO of chip maker Onsemi, a company previously known as ON Semiconductor. Many of the chip makers said they were using their new power with restraint, helping customers avoid problems like factory shutdowns and raising prices modestly. That’s because gouging customers, they said, could cause bad blood that would hurt sales when shortages end. Even so, the power shift has been unmistakable. “Today there is no leverage” for buyers, said Mark Adams, CEO of Smart Global Holdings, a major user of memory chips. Marvell Technology, a Silicon Valley company that designs chips and outsources the manufacturing, has experienced the change in power. While it used to give foundries estimates of its chip production needs for 12 months, it began providing them with five-year forecasts starting in April. “You need a really good story,” said Matt Murphy, Marvell’s CEO. “Ultimately the supply chain is going to allocate to who they think are going to be the winners.” It’s a substantial change in psychology for a mature industry where growth has generally been slow. Many chip makers for years sold largely interchangeable products and often struggled to keep their factories running profitably, particularly if sales slumped for items like personal computers and smartphones that drove most chip demand. But the components are essential for more products now, one of many signs that rapid growth may linger. In the third quarter, total chip sales surged nearly 28% to $144.8 billion, the Semiconductor Industry Association said. Years of industry consolidation has also wrung out excess manufacturing capacity and left fewer suppliers selling exclusive kinds of chips. So buyers that could once place and cancel orders with little notice — and play one chip maker off another to get lower prices — have less muscle. One effect of these changes was to make chip factories more valuable, including some older ones owned by foundries. That’s because new manufacturing processes have become so costly that some chip designers aren’t shifting to the most advanced factories to make their products. The result has been a demand crunch for less-expensive production lines that are 5-10 years old. So some foundries, in a major strategy shift, are beginning to put more money into older production technology. TSMC recently said it would build such a plant in Japan. Samsung Electronics, a key foundry rival, has also said it was considering a new “legacy” factory. But those investments will take several years to pay off. And they won’t address issues affecting chips like microcontrollers, which are a microcosm for the supply chain squeeze. Microcontrollers combine the ability to make calculations with built-in memory to store programs and data, often adding features that only come from specialized factories. And the number of applications is skyrocketing, from brake and engine systems in cars to security cameras, credit cards, electric scooters and drones. “We’ve probably sold more microcontrollers in the past year than the past decade,” said Marc Barnhill, chief trading officer at Smith, a chip distributor based in Houston. The wait to receive some popular microcontrollers now stretches to more than a year, he said, and prices for the products have leapt 20-fold among traders that buy and sell chips. Amid the turmoil, companies that design or use chips have responded with new tactics. Some designers are adapting their products to be made in different factories with more manufacturing capacity, said Shiv Tasker, a global vice president engaged in that practice for the consultancy Capgemini. And customers that once bought chips based on price and performance also are thinking more about availability. Consider BrightAI, a startup developing devices and software to help businesses connect equipment and other devices to the internet. Alex Hawkinson, its co-founder, said it redesigned one circuit board four times in six months to adapt to different chips. The company also transferred some designers to China to revise products more quickly with components obtained there, he said. Bigger chip users like automakers have started talking directly with manufacturers, rather than following the typical practice of working through subcontractors. Last month, General Motors forged a deal with the chip maker Wolfspeed to ensure a share of the semiconductors coming from a new factory that makes energy-efficient components for electric vehicles. While the chip industry’s power shift has aided Microchip, it has also come with its own headaches. Moorthy said the company had managed to produce more chips in its three main factories in Arizona and Oregon, as well as get more from foundry partners. But demand is growing faster than what it can produce. “We are falling farther behind,” he said. Expanding Microchip’s own plants isn’t easy. For one thing, the company has always relied heavily on buying used manufacturing equipment, but “that whole thing has dried up,” Moorthy said. Acquiring new gear can take 12-18 months and costs more, he said. While the long-term purchase agreements have provided more stability to make such investments, Microchip and others also hope Congress approves a $52 billion funding package, which is expected to include grants to subsidize more U.S. chip production. “Are we counting on it to run our business? No,” said Moorthy. “Would it help some of our investment choices? Absolutely.”

Chip shortage creates new power players

Coronavirus pandemic is still a reality. There are lockdowns in many parts of the world. But with vaccines slowly making their way to the public, consumer demand for products is slowly increasing. However, a new problem may hit manufacturing of cars and electronic devices from smartphones to televisions and more.

There is a shortage of electronic chips.

Industry executives and analysts are mentioning several causes for this. These include bulk-buying by U.S. sanctions-hit Chinese tech giant Huawei Technologies, a fire at a chip plant in Japan, coronavirus lockdowns in Southeast Asia, and a strike in France.

More fundamentally, however, there has been under-investment in 8-inch chip manufacturing plants owned mostly by Asian firms, which means they have struggled to ramp up production as demand for 5G phones, laptops and cars picked up faster than expected.

"For the whole electronics industry, we've been experiencing a shortage of components," said Donny Zhang, CEO of Shenzhen-based sourcing company Sand and Wave, who said he faced delays in obtaining a microcontroller unit that was key to a smart headphone product he was working on. He was quoted by Reuters.

"We were originally planning to complete production in one month, but now it looks like we'll need to do it in two."

Reuters quoted a source at a Japanese electronics component supplier who said it was seeing shortages of WiFi and Bluetooth chips and was expecting delays of more than 10 weeks.

The automotive industry in China, which flagged the issue earlier this month, is anticipating production at some Chinese carmakers to be affected in the first quarter of next year, according to a senior industry association official.

SURGING DEMAND

Consumer demand in China, especially for cars, has snapped back unexpectedly quickly from the coronavirus crisis, and orders for products such as laptops and mobile phones in regions still struggling with pandemic restrictions, such as Europe and the United States, have also picked up.

"Since (these products) all compete for the same fab (fabrication plant) resources the shortage is across all of these sectors and others as well. These are just the most apparent right now," said Kevin Anderson, a senior analyst at Omdia.

Dutch automotive chip supplier NXP Semiconductors has told customers it must raise prices on all products because of a "significant increase" in materials costs and a "severe shortage" of chips, Reuters reported this month.

"Business came back much faster than we expected," NXP CEO Kurt Sievers told German business daily Handelsblatt in an interview on Dec. 11. "Many customers ordered too late. As a result, we are not able to keep up in some areas."

Other short-term triggers for the chip shortage include stockpiling by telecoms giant Huawei ahead of mid-September when its suppliers had to comply with U.S. sanctions, CICC analyst Huang Leping said in a note on Dec. 11.

This was aggravated by Huawei's rivals such as Xiaomi seeking to gain market share by stepping up orders of components, he added.

Xiaomi and Huawei declined to comment.

(With Reuters inputs)

Coronavirus pandemic is still a reality. There are lockdowns in many parts of the world. But with vaccines slowly making their way to the public, consumer demand for products is slowly increasing.

Coronavirus pandemic is still a reality. There are lockdowns in many parts of the world. But with vaccines slowly making their way to the public, consumer demand for products is slowly increasing. However, a new problem may hit manufacturing of cars and electronic devices from smartphones to televisions and more. There is a shortage of electronic chips. Industry executives and analysts are mentioning several causes for this. These include bulk-buying by U.S. sanctions-hit Chinese tech giant Huawei Technologies, a fire at a chip plant in Japan, coronavirus lockdowns in Southeast Asia, and a strike in France. More fundamentally, however, there has been under-investment in 8-inch chip manufacturing plants owned mostly by Asian firms, which means they have struggled to ramp up production as demand for 5G phones, laptops and cars picked up faster than expected. "For the whole electronics industry, we've been experiencing a shortage of components," said Donny Zhang, CEO of Shenzhen-based sourcing company Sand and Wave, who said he faced delays in obtaining a microcontroller unit that was key to a smart headphone product he was working on. He was quoted by Reuters. "We were originally planning to complete production in one month, but now it looks like we'll need to do it in two." Reuters quoted a source at a Japanese electronics component supplier who said it was seeing shortages of WiFi and Bluetooth chips and was expecting delays of more than 10 weeks. The automotive industry in China, which flagged the issue earlier this month, is anticipating production at some Chinese carmakers to be affected in the first quarter of next year, according to a senior industry association official. SURGING DEMAND Consumer demand in China, especially for cars, has snapped back unexpectedly quickly from the coronavirus crisis, and orders for products such as laptops and mobile phones in regions still struggling with pandemic restrictions, such as Europe and the United States, have also picked up. "Since (these products) all compete for the same fab (fabrication plant) resources the shortage is across all of these sectors and others as well. These are just the most apparent right now," said Kevin Anderson, a senior analyst at Omdia. Dutch automotive chip supplier NXP Semiconductors has told customers it must raise prices on all products because of a "significant increase" in materials costs and a "severe shortage" of chips, Reuters reported this month. "Business came back much faster than we expected," NXP CEO Kurt Sievers told German business daily Handelsblatt in an interview on Dec. 11. "Many customers ordered too late. As a result, we are not able to keep up in some areas." Other short-term triggers for the chip shortage include stockpiling by telecoms giant Huawei ahead of mid-September when its suppliers had to comply with U.S. sanctions, CICC analyst Huang Leping said in a note on Dec. 11. This was aggravated by Huawei's rivals such as Xiaomi seeking to gain market share by stepping up orders of components, he added. Xiaomi and Huawei declined to comment. (With Reuters inputs)

Chip shortage may hit car, electronics manufacture as consumer demand bounces back

An American tech company is planning to offer the&nbsp;option of implanting microchips on it employees. The rice-sized implant will be installed in the employees&#39; hands for free.

The implant will help in opening of a door without a key in the office and employees can buy food without a credit card, cash or even a smartphone.&nbsp;

The&nbsp;Wisconsin technology company named Three Square Market which offers this technology for break room or micro markets has stated that over 50 people have signed up&nbsp;for the chip implant. The company is expected to start the chip injection process from August 1. The chip can be easily be inserted between the thumb and the forefinger within seconds.&nbsp;

&quot;It&#39;s the next thing that&#39;s inevitably going to happen, and we want to be a part of it,&quot; Three Square Market Chief Executive Officer Todd Westby said.

Three Square Market will collaborate with a Swedish company BioHax International, which is already experienced at &quot;chipping&quot;&nbsp;its employees.

The chip which is designed to use the Radio Frequency Identification Technology works with the electromagnetic field to identify electronically stored information. The employees can access the information with a simple hand wave.&nbsp;

&nbsp;

The chip can be easily inserted between the thumb and the forefinger within seconds

An American tech company is planning to offer the option of implanting microchips on it employees. The rice-sized implant will be installed in the employees' hands for free. The implant will help in opening of a door without a key in the office and employees can buy food without a credit card, cash or even a smartphone. The Wisconsin technology company named Three Square Market which offers this technology for break room or micro markets has stated that over 50 people have signed up for the chip implant. The company is expected to start the chip injection process from August 1. The chip can be easily be inserted between the thumb and the forefinger within seconds. "It's the next thing that's inevitably going to happen, and we want to be a part of it," Three Square Market Chief Executive Officer Todd Westby said. Three Square Market will collaborate with a Swedish company BioHax International, which is already experienced at "chipping" its employees. The chip which is designed to use the Radio Frequency Identification Technology works with the electromagnetic field to identify electronically stored information. The employees can access the information with a simple hand wave.

American company offers to implant chips on its employees

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