Chip shortage to continue for a couple of years, says Intel CEO

Gelsinger says that it would take at least 2 years to be able to cope with the situation

The coronavirus-driven surge in demand and an unprecedented shortage in semiconductor microchips have thrown the spotlight on a brewing global crisis.

What is even more worrisome is that Pat Gelsinger, Intel's CEO, has come out and said that the chip shortage might continue for a couple of years.

“I think this is a couple of years until you are totally able to address it,” he told The Washington Post. “It just takes a couple of years to build capacity.”

Gelsinger had told Reuters that the company was talking to companies that design chips for automakers about manufacturing those chips inside Intel's factory network, with the goal of producing chips within six to nine months.

Chip factories had to shut down early last year, particularly overseas where most processors are made.

The shortage has also raised worries throughout the personal electronics universe, generating potentially higher prices for popular gadgets like game consoles and computer tablets.

Industry experts say there's little they can do to stem the shortage, which has delayed a new iPhone and forced automakers to temporarily shut factories because they're running short of the multiple computers needed to run engines, transmissions, brakes and other essential features.

What it takes to produce a chip?

Producing a single computer chip can involve more than 1,000 steps, 70 separate border crossings and a host of specialized companies, most of them in Asia and largely unknown to the public.

The process starts with plate-size discs of raw silicon. At chip factories known as 'fabs,' circuits are etched into the silicon and built upon its surface through a series of complicated chemical processes.

The next step - packaging - offers a good illustration of the supply chain challenges.

Wafers emerge from fabs with hundreds or even thousands of fingernail-sized chips on each disc. They must be cut up into individual chips and put into a package.

Traditionally that meant placing each chip onto a “lead frame” and soldering it to a circuit board. The entire assembly would then be packaged in a resin case to protect it.

That process is very labour-intensive, leading chip companies to outsource it decades ago to countries including Taiwan, Malaysia, the Philippines and China.

The packaging step itself has its own supply chain: South Korea's Haesung DS, for example, makes packaging components for automotive chips, exporting them to Malaysia or Thailand for customers including Infineon and NXP. These companies, or in some cases a sub-contractor, then assemble and package chips for automotive suppliers like Bosch and Continental, which in turn supply final products to automakers.

(With agency inputs)