According to Intel CEO Pat Gelsinger, the ongoing global semiconductor chip shortage will get worse in the coming months. In an interview with the BBC, he said it will take “a year or two” before chip supplies worldwide return to normal. While high demand for devices during the pandemic has resulted in this shortage, Mr. Gelsinger believes poor relations between the US and China have also created “a very large gulf.”
Building new factories is still crucial for mitigating this problem, as chip manufacturers are struggling to supply the current demand. However, the American government needs to normalize its relationship with its Chinese counterparts for things to get better in the long run, the Intel chief suggested. “We need to keep doing business in China. If we don’t, they’re forced to build indigenous alternatives,” he said.
One-fourth of Intel’s revenue reportedly comes from China. But it’s not just the American chip giant that’s feeling the heat of the growing tensions between the world’s two largest economies. The whole industry is caught up in that conflict, Mr. Gelsinger said. China has “an insatiable thirst for technology,” he added.
Away from China, the US can also improve its relationship with European countries, the recently-appointed Intel CEO suggested. It is a great opportunity for the Biden administration to rebuild some of the relationships in Europe “that might have been damaged in the last administration.”
Intel lost ground to rivals in the chip industry: CEO
Mr. Gelsinger’s comments come just days after Intel announced its roadmap for chip innovations for the next four years. The company recently opened a new division of its internal foundry business. Called Intel Foundry Services (IFS), this division will manufacture third-party chips. It has already announced Qualcomm and Amazon as its first major clients.
Intel is also investing $20 billion to build two new semiconductor factories in Arizona to expand its production capacity. The company will further announce new factories in the US and Europe later this year. It aims to leapfrog Samsung and TSMC to the top spot in the contract manufacturing business by 2025.
The Intel CEO acknowledged that the company has lost ground to these two rivals in recent years and needs to work its way up again. “We did stumble, we did fall behind to some degree – but we’ve laid out now a clear path to parity with the industry,” he said. Of course, TSMC and Samsung have announced similar investments to expand their respective production capacity.
But this takes time. These new factories will not start churning out semiconductors anytime soon. Perhaps that’s why the Intel CEO warns that the ongoing chip shortage problem is here to stay for some time. And this isn’t the first time he has made such warnings.
In an interview with The Washington Post in April, he had said the tech industry might have to live with this problem for at least a couple of years. He reiterated those comments while speaking at a virtual session of the Computex trade show in Taipei in late May as well. Time will tell how long it will take for things to return to normal.