Intel warns global chip shortage could last until 2023

Pat Gelsinger
Pat Gelsinger

Warnings of an acute supply problem in the next quarter come as Intel reports flat revenues for Q2 2021

Print

PrintPrint
Trade

Read More:

26 July 2021 | 0

Intel has warned that the industry’s prolonged semiconductor shortage is likely to continue until at least 2023 and lead to revenue losses for itself and rival chipmakers.

Although the ecosystem is back to shipping over a million PCs a day, strong and sustained demand for devices continues to stress the supply chain, Intel’s CEO Pat Gelsinger (pictured) said during the firm’s Q2 earnings call.

The company reported a slight 2% year-on-year revenue rise for the second quarter of the year, from $18.2 billion to $18.5 billion. It forecasts a 5.4% revenue increase for Q3, as well as a modest full-year growth of 1% to $73.5 billion.

 

advertisement



 

“While I expect the shortages to bottom out in the second half, it will take another one to two years before the industry is able to completely catch up with demand,” Gelsinger said, according to a transcript of the call published by Seeking Alpha.

He added that the firm’s recently embarked upon IDM 2.0 strategy combines internal manufacturing capacity with the use of third party foundries, which positions the firm to weather the challenges and build a more resilient supply chain. This is a strategy that Intel announced in March following a tumultuous 2020.

The company’s positive Q2 revenue was mostly fueled by a 6% growth in the client computing group (CCG), the company’s largest division, to $10.1 billion.

This was offset by a 9% reduction in revenues for the firm’s data centre division to $6.5 billion. The fastest-growing division was Mobileeye, within Internet of Things, which surged 124% to $327 million for the quarter.

“We remain in a highly constrained environment where we are unable to fully supply customer demand,” Intel’s CEO George Davis said in the company’s earnings call, echoing Gelsinger’s sentiments.

“In CCG, we continue to see very strong demand for our client products and expect TAM [total addressable market] growth to continue. However, persistent industry-wide component in substrate shortages are expected to lower CCG revenues sequentially.

“We expect supply shortages to continue for several quarters, but appear to be particularly acute for clients in Q3. In data centre, we expect enterprise and government, and Cloud to show further recovery in Q3.”

Gelsinger’s and Davis’ remarks echo those made by several major executives in the industry, including most recently the CFO of Taiwanese manufacturing giant TSMC, Wendell Huang. He said he expects the ongoing chip shortage to continue to cripple the tech and automotive industries until at least next year.

In May, both Cisco’s CFO Scott Herren and Dell’s CEO Michael Dell said they expect the crisis to continue until at least the end of 2021, and for “a few years”, respectively.

Cisco’s CEO, Chuck Robbins, by contrast, said in April this year that he would expect the industry to need at least another six months to get through the short term of the crisis, and that the wider crisis is unlikely to be resolved until 2022.

© Dennis Publishing


Like what you see?

Ireland’s ONLY dedicated news feed for the distribution and retail channel.

Our editorial mix includes channel news, trend analysis, Deals Done, regular ‘Channel Chat’ interviews and strategic product focuses. This is a vital medium through which the technology channel can network and identify new business opportunities.

Want more?




Read More:



Comments are closed.

Back to Top ↑