Intel CEO warns global chip shortage could persist for a couple more years

Intel chief executive Pat Gelsinger said that it could take a couple of years for the ongoing global semiconductor shortage to be resolved.

On Monday, May 31, during a virtual session of the Computex trade show in Taipei, Gelsinger stated that the work-and-study-from-home trend during the Wuhan coronavirus (COVID-19) pandemic has led to a cycle of “explosive growth” in demand for semiconductors. This has placed a huge strain on global supply chains.

“But 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 of foundry capacity, substrates and components,” he said.

Shortage will continue until more chip manufacturing plants are built

Gelsinger’s statements come just over a month after he predicted that the shortage would last another two years, until Intel’s new production facilities are up and running.

Intel, the world’s largest semiconductor maker by revenue, unveiled plans in March to invest $20 billion in new fabrication facilities in Arizona that it would open to outside customers.

The plants should boost U.S. semiconductor manufacturing capacity. This has fallen to 12 percent of global output, down from 37 percent in 1990, according to the Semiconductor Industry Association.

Intel’s plans are seen as directly challenging the two other companies in the world that make the most advanced Chips – Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung Electronics.

These two companies have come to dominate the semiconductor manufacturing business. They’ve dominance has moved the bulk of global semiconductor manufacturing from the United States, where much of the technology was invented, to Asia, where more than two-thirds of advanced chips are now produced.

That said, Intel is also investing in facilities outside the U.S.

“We plan to expand to other locations in the US and Europe, ensuring a sustainable and secure semiconductor supply chain for the world,” Gelsinger said, though he did not elaborate on this any further.

Taiwanese government will try to keep the world supplied even as COVID-19 cases mount

Even as Gelsinger predicts two more years of the shortage, the Taiwanese government is pledging that it will try to keep the world supplied with chips even as COVID-19 cases escalate.

Taiwan, which added 240 cases on Tuesday, June 1, has closed schools, curbed social gatherings and shut down entertainment venues, museums and public facilities. Businesses and factories have been allowed to continue to operate. But the government has required them to allow parents to take time off to care for their children.

“The impact on consumption is obvious, because restaurants and the service sector have been required to observe more strict social-distancing,” said Rick Lo, chief economist at Fubon Financial Holdings. “In manufacturing, for now it’s still safe, but if the situation gets worse then workers might not be able to work in the factories. The downside risk is increasing and it really depends on how quickly the outbreak is controlled.”

TSMC on Monday said that its workers are operating in separate teams. Face-to-face meetings have also been curbed and non-essential vendors have been banned from its facilities.

American officials and executives have voiced concerns about the world’s dependence on chips from the island. When asked if the country would prioritize orders from U.S. carmakers as requested by Washington, National Development Council Minister Kung Ming-hsin said they’ll try to meet global car-chip orders as much as possible. (Related: Chip shortage cripples car production amid high demand.)

Follow Computing.news for more news on the ongoing semiconductor shortage.

Sources include:

SCMP.com 1

FoxBusiness.com

SCMP.com 2