Noticed the cost of cars going up recently? Your latest smartphone was a bit pricer than you thought it would be?

You’re not taking crazy pills. What you’re seeing are the effects of a global semiconductor shortage.

Basically, semiconductors are the brain of electronics and they are used in the fabrication of smartphones, digital cameras, TVs, washing machines, refrigerators, cars – almost everything you use in day-to-day life.

And when everyone started staying home ‘cos of COVID, we started using more and buying more devices. So semiconductor demand soon outstripped supply.

In December 2020, a study by the Office of the NSW Chief Scientist & Engineer flagged that the global semiconductor market for chips alone was a US$400+ billion industry and even suggested that some estimates forecast it could reach US$1 trillion by 2030.

Weebit Nano (ASX:WBT) CEO Coby Hanoch seconds that demand is set to grow.

“It’s a huge market, just think for a second about all the surveillance cameras you see popping up everywhere, just think about the number of videos that my wife takes of the kids – that’s all building this industry,” he said.

“People are now on TikTok and Instagram and the amount of data that we’re generating every second is mind-boggling – and the demand for memory is growing insanely fast.”

This growth isn’t just anecdotal – it’s backed by the facts.

Data for May from the World Semiconductor Trade Statistics (WSTS) organisation showed global semiconductor industry sales of $43.6 billion. That’s an increase of 26.2% over the May 2020 total of $34.6 billion and 4.1% more than the April 2021 total of $41.9 billion.

For 2022, the WSTS predicts the market will grow to by 8.8 per cent to US$ 573 billion, driven by a double-digit growth of the memory category.

Semiconductors can’t function without memory

The vast amounts of information that are being stored on computers, laptops, tablets, and smartphones today, primarily use flash memory technology, and the company is developing a Resistive Random-Access-Memory (ReRAM) module – a new kind of memory technology that’s much faster and requires less power to operate than traditional flash memory.

This is vital in the semiconductor industry where volatile and non-volatile memory (NVM) technologies play critical roles in data processing and information storage in nearly every electronic product.

“It’s become now the largest segment in the semiconductor space – and semiconductors are growing very, very fast,” Hanoch said.

“The whole world has undergone such an amazing transformation – everything you touch, you everything you do has semiconductors in it whether it’s your washing machine, your microwave oven, your refrigerator, or even your clothing.

“Semiconductors are everywhere you look, and semiconductors cannot function without memory, you have to have memory everywhere.”

Hanoch said what sets the company’s ReRam module apart from other memory tech is its longer battery life and higher endurance.

“The best example I can give is, a few months ago, Tesla had to recall 160,000 cars and it wasn’t because the engine didn’t work or the braking system didn’t work, it was because of non-volatile memory didn’t function – it wore out.

“Our memory is much more resilient and with our memory, they wouldn’t have had that problem.”

Manufacturing demand creates opportunities

Weebit recently announced it has completed the design and verification stages of the ReRAM module and taped-out (released to manufacturing) a test chip that integrates the module.

“We put on a single chip the processor and all kinds of other elements so that it really looks like a customer chip which we can use to demonstrate to customers how the technology will work in their environment,” Hanoch said.

Weebit is now in talks with potential customers as well as working with production facilities on transferring the technology to a mass production facility for commercialisation.

The company expects to have its first silicon samples of the embedded ReRAM module towards the end of this year and plans to demonstrate the module and report functional testing results in the first quarter of 2022 – with qualification of the module expected by mid-2022.

It’s important to note though, that lockdown measures over the last 18 months have made it difficult for manufacturers to react to increased demand across the supply chain.

Goldman Sachs research’s Toshiya Hari said that market tightness should ease in Q3-Q4 and into 2022 with “many governments in the process of making policies to fund domestic semiconductor industries to a) address the shortage, b) create more robust local supply chains and c) for national security purposes.”

And on June 8, the US Senate approved $52 billion to fund the semiconductor manufacturing, design, and research provisions in the Creating Helpful Incentives for the Production of Semiconductors (CHIPS) for America Act as part of the US Innovation and Competition Act (USICA) – but it’s yet to be approved by the House.

“Boosting domestic chip manufacturing and research will keep America on top in semiconductors, which underpin the game-changing technologies of today and tomorrow,” US Semiconductor Industry Association president and CEO John Neuffer said.

This presents not only an opportunity for developers like Weebit – but also for companies that produce the tools and machinery to make chips – and semiconductor companies that can fabricate their own.

Essentially, higher demand could drive investments in chip fabricators.

Who are the other ASX listed semiconductor stocks that could benefit?

4D Memory (ASX:4DS)

One potential benefactor is semiconductor development company 4D Memory, based in Silicon Valley (of course). It specialises in non-volatile memory technology.

The company is pioneering an interface switching ReRAM for next generation gigabyte storage in mobile and cloud.

In its June quarterly, the company highlighted that its partner imec had finalised the production of 18 wafers. A wafer is a thin slice of semiconductor (like crystalline silicon) which acts as the layer for microelectronic devices to be built in/on.

Oh, and while there was space capacity on imec’s state-of-the-art production equipment, 4DS also manufactured another 23 wafers.

The company will test both lots of wafers with results expected in mid-August 2021.

Next steps include demonstrating a megabit memory in a production-compatable process with the ultimate aim of – you guessed it – commercialisation.

Brainchip Holdings (ASX:BRN)

Brainchip is a unique company – it’s basically developed an ultra-low power, AI neural processor that is capable of continuous learning.

This is neat stuff, because customers can create ultra-low power chips and systems with the ability to incrementally learn on-chip without the need to retrain in the cloud.

So it can think with ultra-low power consumption because it eliminates the power usage caused by interaction and communication between separate elements.

And this avoids dependency on network connections to powerful remote computer infrastructures.

Archer Materials (ASX:AXE)

Archer is another Aussie listed technology company that builds advanced semiconductor devices, including processor chips that are relevant to quantum computing.

The company is developing the 12CQ quantum computing chip – a world-first qubit processor technology that would allow for mobile quantum computing powered devices.

Last month, Archer announced it has an early indication of on-chip qubit control in microscopic-scale qubit material.

This is important because Archer’s chip could potentially operate at room temperature (unlike the low temperature required normally) and integrate into modern electronics.

“We have the strongest indication yet that on-chip control of quantum information in our qubit material is within reach and entirely possible under miniaturisation conditions required for any future chip operation,” Archer CEO Dr Mohammad Choucair said.

Bluechiip (ASX:BCT)

The Victoria-based company makes smart chips based on MEMS technology for tracking very low temperature biological samples, down to -196 degrees Celsius.

The company says the tech has applications in the healthcare industry, particularly those businesses which require cryogenic storage facilities (biobanks and biorepositories) as well as markets including cold chain logistics/supply chain, security/defence, industrial/manufacturing and aerospace/aviation.

This year BlueChiip has also made production improvements to the quality, performance and scalability of its chips, with the optimisation stage of the chip commercial production expected to attain higher quality and yield. The aim is to achieve economies of scale and lower production costs as the company approaches full volume production.

The company also just announced a US$1.6 million settlement with customer Labcon after disputes arose when Labcon wanted to terminate the supply agreement.

The companies also since signed a new supply agreement for the new Bluechiip Enabled consumables, readers, and software.

“The market opportunity for our new products is significant; we believe demand for them will only increase in today’s world of ultra-low temperature storage and transport of highly valuable biologic materials,” Bluechiip managing director Andrew McLellan said.

BluGlass (ASX:BLG)

Another Australian is BluGlass, who are developing semiconductor manufacturing tech using a process called remote plasma chemical vapor deposition (RPCVD), or the manufacture of high-value semiconductor devices such as laser diodes, next generation LEDs and microLEDs.

Apparently RPCVD’s unique low temperature, low hydrogen growth platform offers benefits to electronics manufacturers over existing growth techniques – including higher efficiency, lower cost, and greater substrate flexibility – and has the potential to enable novel applications.

BluGlass has the installed manufacturing capacity on-site at its facilities in Australia and the US to meet customer demand and is working with its supply chain partners to prepare to scale to volume manufacturing.

The company expects to launch its first laser diode commercial product in 2021.

K2 Energy (ASX:KTE)

Australian IP investor K2 Energy is dabbling in semiconductors via a shareholding in NASDAQ-listed Atomera.

K2 bought the exclusive worldwide rights to the Mears Silicon Technology (MST), a patented, quantum-engineered material that enhances transistors to deliver significantly better performance in today’s electronics.

In January Atomera announced a joint development agreement with a leading semiconductor provider for integration of MST into their silicon fabrication process which includes a manufacturing licence allowing the customer to fabricate semiconductor wafers incorporating MST for use in their products.

“The agreement will generate revenue for Atomera this year,” Atomera president and CEO Scott Bibaud said.

Silex Systems (ASX:SLX)

Silex is an R&D company whose primary asset is a laser uranium enrichment technology, but through a subsidiary called Translucent they’ve licensed a set of semiconductor materials known as crystalline rare earth oxides (cREO) to UK company IQE to turn into chips.

IQE is progressing the cREO® technology towards commercial deployment for 5G mobile handset filter applications but Silex says the outcome of this commercialisation program is uncertain and remains subject to various technology and market risks.

Sensera (ASX:SE1)

Sensera made it name with MEMS (micro-electromechanical systems) cow ear tag trackers, but has expanded into software and chips in the health sector – mainly for blood monitors and heart pumps which are inserted inside the body.

The company says hhe MEMS market was valued at US$10.9 billion in 2020, and it is expected to reach US$17.7 billion by 2025 – a CAGR of 10%.

Notably, Sensera is one of the few independent MEMs design and fabrication facilities in the United States.

Audio Pixels (ASX:AKP)

The Israeli directional sound MEMs chip maker has been persevering with its difficult-to-produce speaker for about 13 years.

The company have been trying to develop a new kind of digital speaker that can deliver ‘boom-box’ sound from a mobile phone.

Even though the supply chain issues had an impact on milestones around chip packaging and demonstration systems, it looks like all that hard work could be paying off – the company reckons it’s on track to begin production in Q4 21.

Pivotal Systems (ASX:PVS)

Pivotal makes gas flow monitoring and control technology used while making semiconductors which require precise flows of gas to shape the underlying wafer on which the circuits are built.

The company recently announced it’s considering undertaking an initial public offering of its common stock in the US and a dual listing on NASDAQ.

And then Pivotal just raised $6.7 million via a share placement.

“The increase in demand for Pivotal’s products and engineering services from key blue-chip, global OEM and IDM customers thus far in 2021 has meant a requirement for additional equity capital, predominately to fund working capital increases in inventory and accelerated business development initiatives driving leading-edge product development and launches, to meet our growth opportunities in 2021 and into 2022,” chairman and CEO John Hoffman said.

Revasum (ASX:RVS)

Like Pivotal, Revasum sells equipment used in making semiconductors, a selection of very expensive automatic machines involved in grinding and polishing.

In June the company secured the first purchase order for two 6EZ Silicon Carbide (SiC) Polishers from a NASDAQ-listed major global semiconductor wafer manufacturer.

“As the global demand for SiC wafers continues to increase, we are confident the 6EZ is well positioned to win significant market share,” CFO Rebecca Shooter-Dodd said.

Altium Limited (ASX:ALU)

Altium offers innovative printed circuit board (PCB) design software which basically allows designers, part suppliers and manufacturers to develop and manufacture electronics products faster and more efficiently.