One of the world’s leading manufacturers of microchips has said it expects the global microchip shortage to stay for at least six months, as production lines around the world slow down in its wake.
For the unaware, a shortage in the production of semiconductors used in computer microchips has caused havoc in supply chains around the world over the past few weeks.
Everyone from the automotive industry, medical technology and consumer goods has been impacted over the past few months as manufacturers struggle to secure microchips for their products.
Now, we’ve had an update from the head of computing giant, Cisco, who says that the shortage is set to stay for at least six months as production rates struggle to keep up with increasing demand.
Cisco’s chief executive, Chuck Robbins has told the BBC that “we think we’ve got another six months to get through the short term. The providers are building out more capacity. That’ll get better and better over the next 12 to 18 months,” he said.
“Right now, it is a big problem because semiconductors go in virtually everything,” Robbins said, adding that in terms of who the suppliers are, “I think that it doesn’t necessarily matter where they’re made, as long as you have multiple sources.”
Global Microchip Shortage Set to Stay for At least Six Months
The Cisco chief said that increasingly sophisticated technologies like 5G and demand for artificial intelligence are compounding the shortage of semiconductors, which are essential for electronics to operate.
The problem was compounded by production slow downs, halts in international trade and a surging demand for electronics as a result of the COVID-19 pandemic.
The problem is so severe that even U.S. President Joe Biden has stepped in and deemed it a “top priority” for the White House to increase production rates of microchips.
According to the Semiconductor Industry Association, more than 75% of the world’s semiconductors come from East Asia, where Samsung and TSMC lead the manufacturing charge.
Chief Executive at Intel, Pat Gelsinger has told the BBC that having three-quarters of the globe’s semiconductors manufactured in Asia was not “palatable,” and likely to result in shortfalls like we’re experiencing at the moment.
Intel has announced plans for two new production facilities in Arizona to help with microchip manufacturing rates, at a cost of more than $20 billion. Taiwan’s TSMC has also announced plans to spend $100 billion expanding its manufacturing capacity over the next 36-months.
Dan Ives, a technology analyst has told the BBC that microchip and semiconductor demand “is probably 25% higher than anyone would have expected. This is going to be an issue for the next three to six months,” he added.