BackGlobal chip shortages may continue for the next couple of years: Intel CEO
Pat Gelsinger said the pandemic has led to a “cycle of explosive growth” in the industry, placing strain on the supply chain
PremiumThe global chip shortage, which has affected electronics companies all over the world, may continue for the next two years, Intel chief executive officer (CEO) Pat Gelsinger has said. He was speaking at the Computex 2021 trade show. Gelsinger said the pandemic has led to a “cycle of explosive growth" in the industry, placing strain on the supply chain. “While the industry has taken steps to address near-term constraints, it could still take a couple of years for the ecosystem to address shortages in foundry capacity, substrates, and components," he added.
Gelsinger also said that the entire supply chain will have to “rise to the occasion" to get past the shortages. “Whether it’s Wi-Fi modules, substrates, panels or any other critical component, the lack of supply restrains the growth we need to refuel the world economy," he said.
The Intel CEO isn’t the only one who expects the shortages to continue well past a few quarters, though this may be the first time the industry has publicly noted that the impact may continue past the next year. “The semiconductor shortage will severely disrupt the supply chain and will constrain the production of many electronic equipment types in 2021. Foundries are increasing wafer prices, and in turn, chip companies are increasing device prices," said Kanishka Chauhan, principal research analyst at Gartner, had said on 12 May.
The chip shortages have affected all electronics firms, ranging from smartphone OEMs to television and accessory makers. “The chip shortage started primarily with devices, such as power management, display devices and microcontrollers, fabricated on legacy nodes at 8-inch foundry fabs, which have a limited supply," Gartner noted earlier this month. It has since extended to other devices, adding shortages for substrates, wire bonding, passives, materials and testing.
Lead times in the industry, which is the time elapsed between order and delivery of a chip, have risen to 14 weeks for the first time since 2017, according to some estimates. “We see customers accelerating the bookings for early deliveries and attempting to build buffers and creating the demand-supply imbalance you all hear out there," Hock Tan, president and CEO, Broadcom, said during an earnings call in March. Tan also said that 90% of Broadcom’s 2021 supply had already been ordered by customers at the time.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
