Six months after predicting that the global chip shortage would last until at least 2023, Intel CEO Pat Gelsinger is now suggesting it could be 2024 before we’re fully out of the woods.
“[W]We believe that overall semiconductor shortages will now drift into 2024 from our earlier estimates of 2023, just because the shortages have now hit equipment and some of those factory ramps are being challenged more,” he told CNBC on Friday.
But while that sounds a bit doom and gloom, know that “chip shortage” is a complicated, evolving situation that doesn’t affect every type of chip at all times. Some industries and some types of parts are more affected than others over time. In fact, Intel’s own chips are doing pretty well. “For the first time in years, Intel’s fabs and our substrate supply are close to meeting our customers’ demand,” Gelsinger said on the company’s Q1 2022 conference call yesterday.
When Gelsinger says the shortage will continue into 2024, he’s partly talking about the industry’s ability to meet demand for new products built on new lines, not just existing ones. “We anticipate that the industry will continue to see challenges in areas such as foundry capacity and tooling availability as an IDM through at least 2024,” he said on yesterday’s conference call. Digitimes recently reported that chip manufacturing equipment suppliers are now secured more than 18 months, up from six months last year.
Put another way, CPUs, GPUs, and gaming consoles were among the hardest-hit items, but it seems like supply and demand are already aligning there. But network chip vendors are still in the midst of a significant chip shortage: Gelsinger cited dropped Ethernet as a particularly difficult “ecosystem supply constraint” that has slowed PC shipments.
But that’s not why Intel’s Client Computing Group (which covers consumer processors, among other things) fell 13 percent this quarter. Intel attributed this to a “declining Apple CPU and modem business” and “OEM inventory burn” as well as “lower consumer and educational demand” — aka schools are buying fewer Chromebooks and Apple has all but walked away from Intel altogether its own M1 processor that left Intel laptops in the dust.
Incidentally, Intel is one of the companies investing heavily in new production lines and building new factories in Ohio, Arizona and Germany, although the current schedule suggests none of these new factories will come online until the chip shortage is over. The first new factories in Chandler, Arizona are not slated to open until 2024.