Intel Warns Chip Supply Shortages to Last Years

Intel announced that it could be several years before a reversal in the global shortage of semiconductors occurs. This issue has caused numerous problems for multiple industries, ranging from shuttering automotive production lines to making consumer electronics impossible to find.

The work-from-home cycle that started with the COVID-19 lockdowns in 2020 worsened the existing situation where the industry was drawing down inventory to create on-demand orders. It became a perfect storm of mitigating factors that put tremendous strain on the global supply chain.

Although Intel notes the industry has taken steps to address the near-term constraints of these shortages, the company expects that it will take at least two years before supplies reach a measure of normalcy again.

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How the Chip Shortage Problem Gets Solved

Intel plans to expand to multiple American and European locations to start producing semiconductors in several new areas. The thinking behind this $20 billion investment is that supply chain diversification will work to pick up the losses that might occur in other global spots.

Two companies, one in Taiwan and the other in South Korea, have dominated this industry. About 70% of the chips get manufactured in Asia, which has been increasing over the past two decades.

Intel also plans to expand its advanced manufacturing capacity, building two factories in Arizona to manage its most complex chips.

The goal is to get the automotive industry fully operational by the end of 2021. After that, the other shortages will also get addressed.