Published 19.35 ET 2 May 2021
The global semiconductor shortage that pervades a wide range of industries is unlikely to be resolved in a few more years, according to Intel Corp.’s new CEO Pat Gelsinger.
The company is working at some of its factories to increase production and address the chip shortage in the automotive industry, he said in an interview with CBS News, based on excerpts from its “60 Minutes”
“We have a couple of years until we catch up with this growing demand across all aspects of the business,” Gelsinger said.
The demand for semiconductors was boosted in 2020 as consumers procured home gadgets during the pandemic. But meeting this increase has been tough thanks to closed plants among other factors. Companies around the world say they expect supply chain constraints due to logistical backlogs and the shortage of chips will continue into much of 2021.
The global crisis has catapulted semiconductor companies into the spotlight and to the top of political agendas. The Biden administration last month told companies fighting each other over semiconductors that it has bipartisan support for state funding to address the shortfall.
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Gelsinger said U.S. dominance in the industry had declined so much that only 12% of the world’s semiconductor production takes place in the country today, up from 37% a quarter of a century ago. Intel is the only manufacturer of advanced, cutting-edge chips, he told CBS.
“And anyone who looks at the supply chain says, ‘This is a problem,'” he said. “This is a large, critical industry, and we want more of it on American soil: the jobs we want in America, the management of our long-term technology future.”
He added that his company will not be “nearly as focused” on its share buyback program as it has been until now.
Delivery restrictions hit a wide range of industries, with both technology companies and car manufacturers marking production cuts and lost revenue from the fallout.
It has forced the entire automotive industry to reduce production, with Ford announcing the shortage is likely to reduce production by 1.1 million vehicles this year. Jaguar Land Rover Automotive Plc, Volvo Group and Mitsubishi Motors Corp. recently joined the growing list of manufacturers at idle factories. Apple Inc. warned supply constraints shrink sales of iPads and Macs.
Meanwhile, Mark Liu, chairman of Taiwan Semiconductor Manufacturing Co., told CBS that his company, after hearing about shortages late last year, was trying to “squeeze” out as many chips as possible for car companies.
“Today we believe that we are two months ahead of us in meeting the (minimum) requirement for our customers – before the end of June,” he said.
The supply shortage can only be remedied by the end of the year or the beginning of 2022, CBS said.
“There’s a time delay,” Liu said. “Especially in the field of car chips, the supply chain is long and complex.”
Liu also sought to ease concerns that U.S. companies are dependent on Asian suppliers, which account for 75% of production, according to CBS.
“This is not about Asia or not Asia, because there will be a shortage no matter where the production is located,” he said. “Because it’s because of Covid.”
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