Intel Plans to Build Semiconductor Fabs to Reverse Shortage

New Intel chief executive officer Pat Gelsinger stated that it will take “at least several months” to “ease the strain” of the current global chip shortage, which is impacting an array of industries. In a “60 Minutes” interview, Gelsinger added that it would take “a couple of years” to catch up to demand that was amplified by the COVID-19 pandemic and subsequent increased sales of electronics. He added that U.S. companies produce a mere 12 percent of the world’s semiconductor chips, down from 37 percent 25 years ago.

Bloomberg reports that, “companies worldwide say they expect supply-chain constraints due to logistics backlogs and the chip shortage to continue for much of 2021.” “This is a big, critical industry and we want more of it on American soil: the jobs that we want in America, the control of our long-term technology future,” said Gelsinger.

The chip shortage has forced several automakers — including Ford Motors, Jaguar Land Rover Automotive, Mitsubishi Motors and Volvo Group — to cut output. At Taiwan Semiconductor Manufacturing Co., chair Mark Liu said that, “having heard about shortages at the end of last year, [TSMC] tried to ‘squeeze’ out as many chips as possible for car companies.”

He added that TSMC is two months ahead and can catch up to minimum requirements by end of June. But, he warned, “there’s a time lag … in car chips particularly, the supply chain is long and complex.”

VentureBeat reports that Gelsinger also asked for “8 billion euros ($9.7 billion) in public subsidies towards building a semiconductor factory in Europe,” although, later, the company said he hadn’t given a specific figure. He met European Commissioner Thierry Breton, who described the meeting as an “in-depth discussion.”

Breton is eager for Europe to “drastically increase production capacity — both on its own and through selected partnerships to ensure security of supply.” To that end, the Commission also held talks with ASML and NXP, two Dutch chip manufacturers. So far, Intel is reportedly the only company “to express concrete interest in Breton’s goal of producing the most advanced chips in Europe.”

The Wall Street Journal reports that other industries besides automakers are suffering from the chip shortage, with the result of “higher price tags for consumers, longer waits for goods, empty store shelves and swaths of the business world racing to secure whatever supply they can.” According to IHS Markit, “an index measuring the price of inputs for electronics companies in March soared to the highest level recorded in more than two decades of tracking.”

A recent Goldman Sachs report stated that chips are “an important manufacturing component for 12 percent of the U.S. gross domestic product, and reduced supply can boost prices for some categories of products by as much as 3 percent,” adding that 169 U.S. industries are “directly affected.” IDC stated that “semiconductors are a $442 billion industry.”

WSJ says that, “the types of semiconductors where supply is most squeezed are lower-end chips common in electronics and appliances that consumers splurged on during the pandemic,” impacting consumer goods and appliances from the likes of Whirlpool and LG Electronics. IC Insights said that “total semiconductor unit shipments are expected to increase 13 percent this year to a record 1.13 trillion units.”