Intel warns of two-year chip shortage

CEO Pat Gelsinger has warned the worst of the global chip crisis is yet to come, after Intel reported flat revenues for 2021.

The chip shortage, caused by a combination of the pandemic, global supply shortages and poor relations between the US and China is likely to last well into 2023, according to Gelsinger.

The company reported a slight two percent YoY 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 one percent to $73.5 billion. 

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Intel is set to announce the construction of new semiconductor factories in Europe and the US, after the Biden administration announced $52 billion of infrastructure spending to combat the shortage.

The firm’s recently embarked upon IDM 2.0 strategy combines internal manufacturing capacity with the use of third-party producers, which positions the company to weather the challenges and build a more resilient supply chain.

Roughly 25% of Intel’s revenue is tied up in China, which Gelsinger says has “an insatiable thirst for technology that helps them digitise their economy”.

He said he hoped that Intel could be “as influential as possible” in bringing back good relations between the US and China.

In its roadmap to 2025, Intel also announced a move to smaller, more powerful semiconductors to combat chip shortages

The company aims to move away from naming its chip tech using nanometres – which they originally used to name the small spaces between transistors, but has since become a marketing term.

“It’s a lot of years since we were actually measuring physical dimensions,” says Gelsinger, acknowledging that the “industry has drifted away from how Intel looked at it.”

“It’s a new era of 3D structures and atomic level devices,” he says, citing new architecture and power delivery networks that he hopes will drive the firm forward in the coming decade.