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.
Source:
Intel Computex Opening Keynote (YouTube)
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'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.
18 Comments on Intel CEO Predicts Chip Shortages Across the Ecosystem to Run Another Couple of Years
Any thoughts? To me, seems plausible (and like something I'd do).
Even if they did do the above, that's not the issue here.
Also having worked in manufacturing I know first hand that manufacturers do not like building new factories, it is seen as high risk, instead there is a tendency to increase prices as capacity draws closer, and only then if that doesn't stem demand a decision to expand might be carried out.
No, it was not just DIY and OEM demand for home entertainment and gaming.
Not just countless enterprises sourcing office PCs and workstations to get home office setups going.
Not just IT departments & companies looking to beef up their infrastructure or setting up whole new networks.
Not just crypto taking off again on GPUs and recently on storage hardware as well.
Not just manufacturers, distributors and retailers trying to abuse a stricken market for maximum profits.
Not just scalpers to discover pc hardware as a lucrative addition to their portfolio.
Not "just" a global pandemic reducing production output and disrupting large sectors of the economy, which rely on "on demand delivery" to not bock down in no time.
Given all the news of past months, it certainly looks like an amalgamation of all the above (and most likely some more) to create the mess we currently reside in.
You could say the pandemic was a result of the governments' actions, but it was the governments that utterly caused the situation.
But that alone was enough. You stop global production, you increase demand, stuff runs out.