Demand for Leading-Edge Chips Could Catch Some Makers Unawares

Amid a weak outlook for overall chip sales in the second half of the year, demand for the latest generation of semiconductors is expected to be a pillar of strength.

The new versions of silicon chips are capable of powering the faster, more whiz-bang PCs and gadgets that will have the greatest appeal when sales pick up.

The catch is, many cash-strapped chipmakers have been holding off investing in the technologies necessary to make the latest chips. Perhaps as soon as the end of the year, assuming demand accelerates, there could be shortages of so-called leading-edge chips, according to Auguste Richard, an analyst at First Albany. Made up of smaller-than-ever, tightly packed transistors, the newest generation of chips is carved from big, more cost-efficient silicon wafers. ...