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Think the chip shortage is terrible? We haven’t seen the worst of it yet. Not only is this shortage predicted to continue beyond 2022, but top executives from Intel and Apple chip supplier TSMC have issued another dire warning.
According to these industry insiders, the global chip shortage woes now affect the chipmaking machines themselves.
These global supply chain constraints began in 2020 because of the COVID pandemic. Worker shortages due to illness and the subsequent lockdowns to slow the spread of COVID forced chipmakers to halt production.
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It was the perfect storm – manufacturing was stalled while demand for electronics skyrocketed.
Chipmakers quickly fell behind and have not been able to keep up with the demand.
Manufacturers are dumping millions into building new semiconductor factories to increase production, but they’ve encountered a significant obstacle. There are no chips to power the chipmaking machines.
It’s a vicious cycle, with lead times on chipmaking hardware extending out two to three years. This wait time is up significantly from pre-pandemic lead times that spanned months, not years.
Intel’s CEO, Pat Gelsinger, told CNBC’s TechCheck that he expects the chip shortage to last into 2024 because of this impact on this critical chip manufacturing equipment.
Gelsinger isn’t the only one with this alarming prediction. Other CEOs within the chip industry share his grim outlook, reports the WSJ.
“There’s this wishful thinking that by the end of 2022, supply will be balanced with demand,” said Tom Caulfield, chief executive of contract chip manufacturer GlobalFoundries Inc told the WSJ. “I just don’t see it.”WSJ
To speed up recovery, companies that continue to supply chips are shifting their focus away from consumer electronics. Instead, chips are being delivered to other chip manufacturers who need these precious components to increase production. By providing chip makers first, the industry may be able to finally claw itself out of this hole slowly and steadily.