Intel, microchip shortage extended to 2024

According to Intel, the problem of microchip production and the supply of raw materials required to produce them will have to wait until 2024, not 2023 as predicted.

Intel and the shortage of raw materials for microchip production

According to CEO Pat Gelsinger, the so-called microchip shortage will not be resolved in 2023, but will have to wait at least another year. 

The microchip crisis triggered by the difficulty in finding raw materials from Asia, and more specifically from China, the world’s largest exporter, has become even more acute following the Russia-Ukraine war.

While the supply of raw materials seems to have been successfully stemmed by increasing extraction in the United States, in some deposits in Europe and above all in Africa in the former French and British colonies, it has not yet been possible to patch up production capacity. 

According to the American semiconductor and processor company, despite an enormous investment of no less than $80 billion, the results will only be appreciable from 2024 and this despite a drop in demand of 13% this year. 

According to Intel, the decline has already been appreciated by the market, but despite this, production capacity must still be implemented to meet future challenges and product differentiation. 

In recent years, due to objective difficulties in finding these microprocessors, many big tech companies, including Microsoft and Apple, have organised themselves independently. 

Microsoft produces and designs its own processors, which are patented, while Apple has set up its own production of M1-type processors, almost entirely replacing the hardware supplied by Intel. 

Another blow to demand certainly comes from the lack of contract renewals by schools and universities, which, because of the crisis and the pandemic, have not needed to update their equipment. 

In a recent interview with CNBC, the CEO of the US company said:

“The shortcomings that today affect the equipment and production plants, severely tested”.

The war in Ukraine has fuelled the transport crisis, and between the pandemic and the Shanghai lockdown, microchip manufacturers do not see the dissipation of their fears around the corner. 

The crisis in raw materials, semiconductors and microchips

In 2021 alone, the latest estimates put the loss in the US at $240 billion as a result of the supply crisis. 

Intel’s internal sources indicate that the company is building two new-generation chip factories in Arizona and Ohio. On European soil, the company has announced a €17bn investment in a state-of-the-art gigafactory in Germany for semiconductor production, as well as the creation of research and development hubs in France. 

These investments in R&D will be followed by investments in foundries and back-end production in Italy, Poland, Ireland and Spain where production costs are lower. 

There is a strong awareness that it is essential to invest in a system that will lead us to maintain the technological sovereignty that is vital to maintain competitiveness in the long term. 

Kearney, an independent research firm, has compiled a report showing that demand for cutting-edge semiconductors (10 to 5 nanometres) in Europe will double by 2030 with an annual growth rate of 15% to reach a value of $80 billion.

Greg Slater, Vice President and Senior Director (and Global Regulatory Affairs) at Intel said:

“Producing 5 or 7 nanometer chips is very complex, advanced technologies, infrastructures and production processes are required and it is therefore very difficult for a new player to come into play”.

So if Europe will support the existing companies in the market by creating an ad hoc ecosystem, we could have our say on a global level.