Semiconductor Shortages could stretch into 2022 or even further

Major industries are facing manufacturing bottlenecks due to the global chip shortage that is going on. The latest from different industry leaders suggest that the problems are set to continue into 2022 or even further beyond.

Semiconductor Shortages could stretch into 2022 or even further

Major industries are facing manufacturing bottlenecks due to the global chip shortage that is going on. The latest from different industry leaders suggest that the problems are set to continue into 2022 or even further beyond.

The Leaders from Intel, Nvidia, and Taiwan Semiconductor Manufacturing Company (TSMC) all see the shortage of semiconductors to continue into 2022. Intel CEO Pat Gelsinger telling The Washington Post this week that it may take a couple of years to sort out.

Pat did add that they do have the ability to help alleviate the shortage, but he warns that it will take time to build enough capacity to address the issues with the shortage.

Just this last month, Intel announced a twenty-billion dollar investment for two new fabrication facilities – also known as fabs – in Arizona as a part to boost Intel manufacturing.

Taiwan Semiconductor Manufacturing Company (TSMC), CC Wei, also expects the chip shortage to extend into 2022. Speaking to analysts on a conference call this week, Wei said that while some of its auto industry clients can hopefully expect an easing of shortages in just the next quarter, overall deficits are to be expected to last through 2021 and into next year.

The Taiwanese company, which is one of the major global chip suppliers, announced at the beginning of April that is investing one-hundred billion to expand the manufacturing capacity at its factories over the next three years. Supply shortages for TSMC and other chipmakers in Taiwan were exacerbated by extreme weather earlier this year when a serious drought struck the country.

Demand is Beating Supply

Nvidia is tending to be more optimistic about getting back on track, the earliest the company expects to be able to meet the demand is the first quarter of 2022.

In a statement last week regarding its fiscal outlook, Nvidia Chief Financial Officer Colette Kress said demand continues to exceed supply while its channel inventories remain “quite lean”. This is also because of the releases of the 3000 Series of their graphics cards. She also added:

We expect demand to continue to exceed supply for much of this year. We believe we will have sufficient supply to support sequential growth beyond quarter 1.

With semiconductor chips that are required by a vast amount of electronics, the production of smartphones, laptops, game consoles, and other devices has been severely affected by high demand and very little supply.

But one of the big industries feeling the crunch of the shortage is the auto industry – with carmakers expected to lose sixty-one billion in sales from pandemic chip shortages.

This last week, Ford announced a series of vehicle factory shutdowns due to the chip shortage. In March, General Motors announced it would suspend some production in Missouri, while Japanese car brands Nissan and Honda are also facing downtime due to the shortages.

In March, the EU set out a ten-year strategy with ambitions for Europe to manufacture one-fifth of the world’s semiconductors by 2030.