Supply Chain Shortages for Semiconductors to Last to 2024, Says Intel CEO

By Logan Wamsley

If there was any hope that the electronic component and semiconductor markets are on the upswing, many of those hopes were squashed in a recent CNBC interview with Intel CEO Pat Gelsinger. According to Gelsinger, he expects the semiconductor industry to face supply chain shortages until at least 2024.

Gelsinger’s comments come following the release of Intel’s fiscal second-quarter forecast, which did not show the growth that many analysts on Wall Street expected. Following the report’s release, Intel shares dropped more than 6%.

The reason he cites for the extended timeframe is the availability of key manufacturing tools, which remain constrained due to ongoing COVID-19 restrictions, as well as restrictions implemented as a result of the Russia-Ukraine conflict.

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

The ongoing shortage has had a variety of consequences for the global economy. Most notably, the shortage has played a significant role in the inflation of the U.S. dollar, which has seen its most rapid increases since the 1980s.

This inflation combined with the shortages against escalating demand have caused chip prices to increase by as much as 30%. To cope many manufacturers have been forced to take extreme measures to maintain production schedules. One report, for example, shows a German automaker cannibalizing chips from new washing machines for their vehicles.

“Sustained Covid-19 eruptions in two-thirds of Chinese provinces and elsewhere in Asia are prompting government-mandated shutdowns and strict containment protocols—creating further labor limitations, straining supply and introducing new supply chain disruptions,” said Richard Barnett, chief marketing officer at Supplyframe. The company expects that 85% of all chip prices will increase in the second quarter with longer lead times for 83% of products.