Intel’s CEO now says chip shortages will “drift” into 2024

Six months later The prediction that the global chip shortage would last at least until 2023Intel 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 into 2024 simply 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 little doom and gloom, you should know that the “chip shortage” is a complicated, evolving situation this does not 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 fabs and our substrate supply are close to meeting our customers’ demand,” Gelsinger told the company yesterday Results call Q1 2022.

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 for more than 18 months, up from six months last year.

Put another way, CPUs, GPUs, and gaming consoles were among the most notorious items affected by shortages, however Supply and demand already appear to be balancing out 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 “decline in Apple’s CPU and modem business” and “OEM inventory burn” and “lower consumer and educational demand” — aka Schools are buying fewer Chromebooks and apple has almost completely switched from Intel to its own M1 processorthat left Intel laptops in the dust.

Incidentally, Intel is one of the companies investing heavily in new production lines, Construction of new fabs in Ohio, Arizonaand Germany, although the current schedule suggests none of these new fabs will come online until the chip shortage is over. The first new factories in Chandler, Arizona are not slated to open until 2024.