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Intel CEO says semiconductor shortage may now extend to 2024

The chip shortage was beginning to tell on equipment manufacturing, making it tougher for companies to procure tools, which would impact production timelines, Gelsinger has said

May 01, 2022 / 02:01 PM IST
(Image Courtesy: Intel)

(Image Courtesy: Intel)

The semiconductor shortage, which has affected toymakers to computer manufacturers, will last longer than expected and potentially drag on until 2024, Intel CEO Pat Gelsinger has said.

In an interview to CNBC on April 29, Gelsinger said he expected the shortage to continue in 2023 and extend to 2024. The reason, he pointed out, was that the chip shortage was beginning to affect equipment manufacturing, making it tougher for companies to procure tools, which would impact production timelines.

Intel has already announced several large investments in the US and Europe to build semiconductor factories.

Also Read: Semiconductors | With China struggling, India has a long way to go

“That’s part of the reason that we believe the overall semiconductor shortage will now drift into 2024, from our earlier estimates in 2023," Gelsinger said. "Just because the shortages have now hit equipment and some of those factory ramps will be more challenged.”

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As production was ramping up and consumer demand for electronics soaring, the chip industry found itself hamstrung by COVID-19 lockdowns.

The rising uncertainty in China, lockdowns in Shanghai, and the war in Ukraine "have demonstrated more than ever that the world needs more resilient and more geographically balanced semiconductor manufacturing”, Gelsinger said.

The Russia-Ukraine war worsened the situation, as Russia controls 44 percent of global palladium supplies, while Ukraine produces 70 percent of the global supply of neon. Both elements are key ingredients in the chip-manufacturing process.

Also Read: Developing a semiconductor industry is a marathon, but India is prepared: IT Minister Ashwini Vaishnaw

The chip shortage has affected the automobile industry as well, with India’s Hero Motors reporting zero dispatches for its electric scooters in April.

Volkswagen's head of procurement, Murat Aksel has said, "The volatile situation will affect us at least beyond the first half of this year."

India is looking to set up semiconductor units, also known as fabs, to reduce import reliance and the government has rolled out a string of incentives to encourage companies to set up these highly specialised and expensive facilities.

Vedanta is in talks with banks to raise debt of $2.5 billion-$3 billion to bolster its semiconductor and display manufacturing plans as it races to become the country's first chipmaker, news agency Reuters reported on April 30.

The oil-to-metals conglomerate decided in February to diversify into chip manufacturing and formed a joint venture with Taiwan's Foxconn. It has a total planned investment outlay of $20 billion.

Vedanta is seeking incentives from the government and is also in talks with several states. After getting subsidies, and once its definitive agreements are in place, the company plans to raise bank debt of as much as $3 billion, the report said.

"We have financial banking relationships across India. We are talking to them," Reuters quoted Akarsh Hebbar, Vedanta's Global Managing Director of Display and Semiconductor Business, as saying.

 
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