Few months ago, Intel CEO Pat Gelsinger predicted the global chip shortage would last until at least 2023. Six months after the prediction, he is now suggesting it might be 2024 before we are fully out of the woods.
Impending Shortage Situation
Recently, Intel’s CEO has put forth his prediction about the ongoing global chip shortage. He said: “[W]e believe the overall semiconductor shortage will now drift into 2024, from our earlier estimates in 2023, just because the shortages have now hit equipment and some of those factory ramps will be more challenged.”
Although it might be a concerning situation, the global chip shortage is an involved, evolving situation that does not affect every kind of chip at every time. Some industries and some kinds of parts have been worse hit than others as things go on. In fact, Intel’s own chips are doing fairly well.
Global Chip Shortage Explained
When Gelsinger says that the global chip shortage will stretch into 2024, he is partly talking about the industry’s ability to meet the demand for new products being built on new lines, not just existing ones. As per certain reports, chipmaking equipment suppliers are now backed up more than 18 months, up from six months just last year.
CPUs, GPUs, and game consoles were some of the highest-profile items hit by shortages, but it seems like supply and demand are already beginning to equalize there. But networking chip vendors are still in the middle of a significant chip shortage: Gelsinger namedropped ethernet as a particularly difficult “ecosystem supply constraint” that has slowed down PC shipments.
Intel’s Client Computing Group
But that’s not why Intel’s Client Computing Group (which handles consumer processors, among other things) is down 13% this quarter. Intel attributed that to a ramp-down of the Apple CPU and modem business and OEM inventory burn as well as lower consumer and education demand. Schools are buying fewer Chromebooks and Apple has all but fully transitioned away from Intel to its own M1 processor, which left Intel laptops in the dust.
Intel is one of the companies investing heavily in new production lines, by the way, building new fabs in Ohio, Arizona, and Germany, though the current timeline suggests none of those new fabs will go online until the chip shortage is over. The first new fabs in Chandler, Arizona, aren’t scheduled to open until 2024.
Also Read: Are giant automakers shutting factories due to the global chip shortage?
