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Chip shortage could bottleneck manufacturing for years

According to executives of Acer and Intel, the global semiconductor shortage will continue until at least 2022, affecting most industries which rely on chips for manufacturing.

Acer’s co-COO Tiffany Huang told Guardian Australia that she expects manufacturing for Acer – one of the world’s largest designers of laptops – to remain hampered until at least the first or second quarter of 2022 as it struggles to source chips. Huang said that on most days, Acer is only capable of fulfilling 50 per cent of global demand, and so it has been focusing its education products rather than gaming products.

“It will continue to be slow until the first quarter or second quarter of next year,” Huang told the Guardian. “We have a severe shortage, and it’s not simply just to make sure every family has a device to use, every person has to have a device for working or education […] we shipped millions of education devices last year [and] this year. That is simply because we believe people really deserve a right to be able to continue their living and learning.”

She said that the global chip shortage will affect many companies, especially if semiconductor supply does not return to normal as the impact of the Covid-19 pandemic on supply eases. Research company Gartner repeated Huang’s prediction, stating that the chip shortage will continue until at least the second quarter of 2022 and some devices will rise in price as a result.

This week, Intel CEO Pat Gelsinger also told the virtual Computex conference that it could take many years for the shortage to be resolved. He said that global supply chains were struggling under the “explosive growth in semiconductors” required for much of the world’s population to adjust to the coronavirus pandemic.

“While the industry has taken steps to address near-term constraints it could still take a couple of years for the ecosystem to address shortages of foundry capacity, substrates, and components,” Gelsinger said.

Intel has plans to expand its US chip manufacturing operations, with a $20bn investment towards two new factories in Arizona for advanced chip manufacturing, including for clients. This could help rebalance the semiconductor supply chain; around 75 per cent of global manufacturing capacity for chips is based in East Asia with Taiwan’s TSMC and South Korea’s Samsung the dominant actors.

The shortage of semiconductors has been caused by several factors, including coronavirus causing facilities to close temporarily or scale down production, the sudden demand for chips to support remote work and study, and the ongoing trade war between the US and China. All this has resulted in serious supply issues for a range of industries, including the automotive sector, gaming, and consumer electronics. Some auto production lines have been put on hold due to a shortage of chips, with Ford, Jaguar Land Rover, and Ford shutting factories and laying off workers while other automakers choose to leave out higher-end features such as integrated navigation systems in order to adapt to the shortage.

Last month, Sony warned that it may not be able to meet record-breaking demand for its flagship PlayStation 5 console into 2022. Sony has avoided making predictions about when the shortage will end. Samsung, meanwhile, has said that the chip shortage is already hitting production of its televisions and home appliances.

Earlier this year, Nvidia announced plans to re-release some of its older GPUs to partners so that they can release new hardware amid extremely high market demand, whilst Qualcomm warned investors that shortages are not just limited to high-end chips but also “legacy nodes” used to make chips for broad markets.

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