Monday, May 31st 2021
Intel CEO Predicts Chip Shortages Across the Ecosystem to Run Another Couple of Years
Intel CEO Pat Gelsinger, speaking at the company's 2021 Computex Opening Keynote address stated that the explosive demand for chips caused by recent inflections of technology, accelerated by the COVID-19 pandemic, has resulted in demand outstripping supply by such extent, that it could "still take a couple of years for the ecosystem to address the shortages."
Gelsinger detailed how the world of information technology is at its biggest crossroads ever, with the emergence of Cloud, 5G, AI, and smarter edge computing changing the way people work, learn, and interact. This has caused a huge growth in the demand for semiconductors straining technology supply chains around the world. Gelsinger stated that his company is working with partners across the technology ecosystem to increase output to meet demand. He detailed how Intel has nearly doubled its own chip wafer manufacturing capacity over the past four years. "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 chip shortages of foundry capacity, substrate, and components.Gelsinger called for the entire semiconductor industry to "rise to the occasion, and ensure that no individual bottlenecks limit growth for the industry; whether it's Wi-Fi modules, substrates, panels, or any other critical component." He warned that lack of supply "constraints" the growth we need to refuel the world economy. Intel, Gelsinger stated, is driving a collaborative approach to help up and down the supply chain, not just with Intel's own suppliers, but also their upstream suppliers. He cited the example of Intel working with suppliers at every level to ramp up production of substrate for chips at the company's Vietnam facility, resulting in improvement of supply by "millions of units" by 2021. He then went on to refresh the company's Integrated Device Manufacturing (IDM) 2.0 strategy, where the company micromanages every link in the supply chain, to respond to the dynamic market.
Gelsinger's comments are extremely telling, even if it's worded to be generalized (not specific to Intel). It means that along with most of the industry, Intel is running behind the demand-supply curve, and expects at least "a couple of years" to restore normalcy in supply. As a semiconductor giant, and America's largest chip manufacturer, Intel CEO's analysis is expected to carry weight, as the company likely has the some of the best competitive analysts and market researchers to go with their supplier program.
Demand is only one half of the problem, the other is the COVID-19 pandemic itself, which has hit supply chains around the world. The semiconductor industry isn't immune, with Taiwan's TSMC recently reporting COVID-19 cases among its workforce, as the island braves a brutal spike in COVID-19 infection rates, crippling the country's public-health infrastructure. TSMC is careful not to scare its enviable clientele that includes Apple, Qualcomm, and AMD; but the infection rates of Taiwan are expected to eventually catch up with TSMC, despite its best efforts to detect and isolate infected employees.
Gelsinger detailed how the world of information technology is at its biggest crossroads ever, with the emergence of Cloud, 5G, AI, and smarter edge computing changing the way people work, learn, and interact. This has caused a huge growth in the demand for semiconductors straining technology supply chains around the world. Gelsinger stated that his company is working with partners across the technology ecosystem to increase output to meet demand. He detailed how Intel has nearly doubled its own chip wafer manufacturing capacity over the past four years. "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 chip shortages of foundry capacity, substrate, and components.Gelsinger called for the entire semiconductor industry to "rise to the occasion, and ensure that no individual bottlenecks limit growth for the industry; whether it's Wi-Fi modules, substrates, panels, or any other critical component." He warned that lack of supply "constraints" the growth we need to refuel the world economy. Intel, Gelsinger stated, is driving a collaborative approach to help up and down the supply chain, not just with Intel's own suppliers, but also their upstream suppliers. He cited the example of Intel working with suppliers at every level to ramp up production of substrate for chips at the company's Vietnam facility, resulting in improvement of supply by "millions of units" by 2021. He then went on to refresh the company's Integrated Device Manufacturing (IDM) 2.0 strategy, where the company micromanages every link in the supply chain, to respond to the dynamic market.
Gelsinger's comments are extremely telling, even if it's worded to be generalized (not specific to Intel). It means that along with most of the industry, Intel is running behind the demand-supply curve, and expects at least "a couple of years" to restore normalcy in supply. As a semiconductor giant, and America's largest chip manufacturer, Intel CEO's analysis is expected to carry weight, as the company likely has the some of the best competitive analysts and market researchers to go with their supplier program.
Demand is only one half of the problem, the other is the COVID-19 pandemic itself, which has hit supply chains around the world. The semiconductor industry isn't immune, with Taiwan's TSMC recently reporting COVID-19 cases among its workforce, as the island braves a brutal spike in COVID-19 infection rates, crippling the country's public-health infrastructure. TSMC is careful not to scare its enviable clientele that includes Apple, Qualcomm, and AMD; but the infection rates of Taiwan are expected to eventually catch up with TSMC, despite its best efforts to detect and isolate infected employees.