The global chip shortage is going to last longer than we expected. According to Intel CEO, Pat Gelsinger, the crippling chip shortage might run past next year. Speaking at Computex 2021, Gelsinger said that the pandemic has led to a “cycle of explosive growth” in the industry which led to strain on the supply chain. “While the industry has taken steps to address near term constraints, it could still take a couple of years for the ecosystem to address shortages in foundry capacity, substrates and components,” he said. This is perhaps the first time someone has said that the chip shortage will last more than a year.
Most predictions so far have said that the chip shortage will affect the industry till late 2022. For instance, Kanishka Chauhan, principal research analyst at Gartner, said on May 12, “The semiconductor shortage will severely disrupt the supply chain and will constrain the production of many electronic equipment types in 2021. Foundries are increasing wafer prices, and in turn, chip companies are increasing device prices.”
The shortage of chips worldwide has impacted electronics companies worldwide, including smartphone makers, laptops, accessories and more. “The chip shortage started primarily with devices, such as power management, display devices and microcontrollers, fabricated on legacy nodes at 8-inch foundry fabs, which have a limited supply,” Gartner said on May 12. “The shortage has now extended to other devices, and there are capacity constraints and shortages for substrates, wire bonding, passives, materials, and testing, all of which are parts of the supply chain beyond chip fabs. These are highly commoditized industries with minimal flexibility/capacity to invest aggressively on a short notice,” the company added.
“We see customers accelerating the bookings for early deliveries and attempting to build buffers and creating the demand-supply imbalance you all hear out there,” Hock Tan, President and CEO, Broadcom, said during an earnings call in March. He said that 90% of Broadcom’s 2021 supply had already been booked by customers by March.
The shortage of chips has been a result of pent-up demand after the global lockdowns last year, growing need for electronics due to work and education from home requirements, and constraints across the supply chain. Smartphone makers have been considering increasing prices due to the shortage.
