Just about everybody is sick and tired of hearing about the chip shortage, putting it right up there with Covid-19 updates.
Still, it is top of mind for chipmaker CEOs and won the attention, again, of the U.S. Congress and the Commerce Secretary on the House’s introduction of a measure to rival the Senate’s passage of the CHIPS Act last summer calling for $52 billion in funding for domestic fabs and tax incentives.
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With a fresh round of fourth quarter earnings calls in recent days, every CEO has again addressed how much longer the chip shortage will hang on. It is beginning to sound like a “chip supply update” will be a staple of earnings calls from now on.
Some of the CEO forecasts might be surprising, suggesting a longer time frame than even some analysts. IDC, as good a source as any, on Jan. 27 came out with a forecast saying tight semiconductor supply will continue through the first half of 2022.
Meanwhile, on Jan. 26, Intel CEO Pat Gelsinger told investors that “unprecedented demand continues to be tempered by supply chain constraints as shortages in substrates, components and foundry silicon has limited our customers’ ability to ship finished systems.” He ticked off the supply constraint impact especially on notebooks, but also automotive, the Internet of Things and the data center.
“These ecosystem constraints are expected to persist through 2022 and into 2023, with incremental improvements over this period,” Gelsinger added.
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Gelsinger’s forecast is at least a year longer than the big-picture perspective outlined by IDC. Nina Turner, a research manager at IDC, said auto semiconductors will continue to be a constraint on the auto market through the first half of 2022, adding that supply should gradually improve in the second half of the year.
“Adding in time to manufacture the vehicle, this means the automotive market will begin to improve towards the end of 2022 and into 2023 if there are no other supply chain shocks,” Turner said in a statement.
IDC noted that all the fabs and investment announcements of recent weeks will have an impact over the next five years, but new capacity will not come online in 2022. That investment includes the $20 billion Intel is putting into two fabs in Ohio and the two others being added to Arizona.
Texas Instruments has a decidedly more upbeat take on the chip crunch and reported it has met customer demand since the start of the pandemic in late 2019. The company is adding two fabs in the U.S. and has also been taking “relatively small steps” to expand production in existing facilities elsewhere. The company reported strong demand from industrial and auto chip customers, with a 19% surge in revenues in the fourth quarter of 2021.
RELATED: TI sees 19% revenue increase as it adds chip and wafer production
Still, it is worth comparing the results of one company such as TI against the bigger ecosystem. Commerce Secretary Gina Raimondo said the department heard from 150 chip companies last fall on the topic and surmised the industry is not out of the woods yet: “The semiconductor supply chain remains fragile…,” she reported.