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Chip deficit will decline after 2022, as demand is much higher than supply, says Intel CEO

The global shortage of semiconductors hampering other manufacturers will take “several years” to mitigate as demand grows along with limited production capacity, said CEO of chip giant Intel.

Semiconductor companies can take some short-term steps to ease the pain, Pat Gelsinger said in an interview, adding that Intel aims to boost production of automotive chips in six to nine months. But the overall solution will take much longer, he said.

“We really believe we can help,” said Gelsinger, who recently became the CEO of the largest revenue-generating semiconductor company in the United States. “But I think this is a few years before you can fully address it,” he said. “It only takes a few years to build capacity.”

The computer chip supply crisis, fueled by growing supply chain epidemics and growing demand, has most clearly hurt automakers, forcing them to temporarily shut down factories. But it also affects the diversity of manufacturers, Gelsinger said, including PCs and other hardware manufacturers.

Gelsinger spoke to The Post after attending a virtual meeting of the White House on Monday to resolve the issue. He said that at that meeting, medical equipment suppliers were loudly concerned about the lack of semiconductors.

Intel is talking to carmakers and auto parts suppliers about steps that could be taken to boost car chip production in the coming months. According to him, Intel intends to start this additional supply in six to nine months.

“It does not affect it in any way, but every part of it helps. We can help alleviate some of the pressure, ”said Gelsinger, an electrical engineer who spent 30 years at Intel early in his career helping design and implement several new microprocessors.

Last week, General Motors և Ford announced several North American carmakers were temporarily shut down due to supply problems, although GM on Tuesday canceled some of its shutdown plans, saying the Spring Hill plant in Tennessee would open earlier than planned. that the plant in Mexico will not need idleness.

“GM Supply Chain has taken steps in conjunction with our supply base to mitigate the short-term impact of the semiconductor situation on these plants,” said spokesman David Barnas.

A problem complicating the supply at this time. Manufacturers place chip orders at many factories because they are unsure of which orders will be placed, says Willie Shih, a professor at Harvard Business School who specializes in technology and manufacturing.

“Imagine that you are a car manufacturer, you want to have more chips, you will be given a one-year lead time. How many will you order? Are you going to order from many sources? You are a betcha, ”said Shih.

The chaotic order makes it difficult for chip makers to figure out where to distribute supplies to meet real, short-term needs, he said.

To provide more domestic chips in the long run, the Biden administration is proposing to spend $ 50 billion on subsidizing semiconductor facilities, an idea that has broad bipartisan support.

Last week, the Automotive Industry Association proposed that some of that funding be used to build automotive chip manufacturing facilities.

“As you are well aware, as the country’s largest manufacturing sector, the auto industry invests $ 1.1 trillion in the US economy, accounting for 5.5 percent of the country’s GDP,” the Automotive Innovation Alliance said in a statement on April 5. in a letter to the department. Trade!

The automakers reintroduced the idea at a White House virtual meeting, but met resistance from other industry leaders who did not want any industry to be privileged.

“In general, the other participants in the call were saying, ‘Son, this is not a good political solution,'” he said.

Gelsinger այլ Another head of semiconductors, Tom Caulfield of GlobalFoundries, based in Santa Clara, California, said that they lobbied for the United States at the meeting, aggressively aiming to expand domestic chip production. Currently, 12% of the world’s semiconductors are manufactured in the United States. Caulfield said he was calling for a doubling of that market share, while Gelsinger said he was lobbying to increase it by 30%.

“Many of the discussions were, ‘Let’s not use this crisis.’ Let’s take the lessons learned. “We need to have more production in this country,” Caulfield said in an interview.

“Achieving such ambitious goals will require government funding, which currently offers more than $ 50 billion, much more investment from industry,” Gelsinger said. Intel announced last month that it would spend $ 20 billion to build two new plants in Arizona as part of a strategy to begin manufacturing chips developed by companies other than Intel.

The US semiconductor industry insists that the federal government should offer more subsidies to compete with Asian countries, which have offered companies major financial incentives to build chip-making capacity.

Harvard professor Shih said subsidies could be useless, noting that some of the world’s largest chipmakers, including Taiwan’s TSMC and South Korea’s Samsung, have spent billions of their own money on production capacity for years.

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