Global chip shortage could last for ‘a couple of years’

16 Apr 2021

Image: © Raimundas/Stock.adobe.com

Estimates from industry players suggest the global semiconductor shortage could stretch into 2022 or beyond.

As several industries face manufacturing bottlenecks due to a global chip shortage, latest estimates from industry leaders suggest problems are set to continue.

Leaders from Intel, Nvidia and Taiwan Semiconductor Manufacturing Co (TSMC) all see the shortage of semiconductors to continue into 2022, with Intel CEO Pat Gelsinger telling The Washington Post this week that it may take “a couple of years” to sort out.

While he added that industry companies do “have the ability to help” alleviate the shortage, he warned that it will take time to build enough capacity to actually address the shortage.

Last month, Gelsinger announced a $20bn investment for two new fabrication facilities, or fabs, in Arizona as part of global plans to boost Intel manufacturing.

TSMC’s CEO, CC Wei, also expects the chip shortage to extend into 2022. Speaking to analysts on a conference call this week, Wei said that while some of its auto industry clients can expect an easing of shortages in the next quarter, overall deficits are expected to last through 2021 and potentially into next year.

The Taiwanese company, which is a major global chip supplier, announced at the beginning of April that is investing $100bn to expand the manufacturing capacity at its factories over the next three years. Supply shortages for TSMC and other chipmakers in Taiwan were exacerbated by extreme weather earlier this year when a serious drought struck the country.

‘Demand will continue to exceed supply’

While Nvidia is more optimistic about getting back on track, the earliest the company expects to be able to meet demand is the first quarter of 2022.

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In a statement earlier this week regarding its fiscal outlook, Nvidia chief financial officer Colette Kress said demand continues to exceed supply while its channel inventories remain “quite lean”.

“We expect demand to continue to exceed supply for much of this year. We believe we will have sufficient supply to support sequential growth beyond Q1,” she added.

With chips going into a vast amount of electronics, the production of smartphones, laptops, game consoles and other devices has been severely affected.

But one of the big industries feeling the crunch of the shortage is the auto industry, with car makers expected to lose $61bn in sales from pandemic chip shortages.

Earlier this week, Ford announced a series of vehicle factory shutdowns due to the chip shortage. In March, General Motors announced it would suspend some production in Missouri, while Japanese car brands Nissan and Honda are also facing downtime.

The crunch has opened a conversation about the world’s reliance on foundries in the US and Asia for this essential tech component.

In March, the EU set out a 10-year strategy with ambitions for Europe to manufacture one-fifth of the world’s semiconductors by 2030.

Jenny Darmody is the deputy editor of Silicon Republic

editorial@siliconrepublic.com