Intel Warns Chip Shortage Could Last Until 2023

The head of Intel has offered a mixed outlook over the ongoing chip shortage that has stressed multiple industries in the past 18 months.

During the chip giant’s Q2 earnings call, Intel’s CEO Pat Gelsinger said that 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.

Forrester Research warned earlier this year that it expects chip supply issues to extend through next year and into 2023.

Intel results

During the earnings call, Intel revealed that for the second quarter Intel posted a net profit of $5.1bn, down 1 percent from the same period last year.

Second quarter revenue meanwhile was also flat at $18.2 billion to $19.6 billion, from $19.7bn a year earlier.

“There’s never been a more exciting time to be in the semiconductor industry,” said said Pat Gelsinger, Intel CEO. “The digitization of everything continues to accelerate, creating a vast growth opportunity for us and our customers across core and emerging business areas.”

“With our scale and renewed focus on both innovation and execution, we are uniquely positioned to capitalize on this opportunity, which I believe is merely the beginning of what will be a decade of sustained growth across the industry,” Gelsinger added. “Our second-quarter results show that our momentum is building, our execution is improving, and customers continue to choose us for leadership products.”

“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 added during a transcript of the earnings call published by Seeking Alpha.

Read also : China Tells Telecom Carriers To Phase Out Foreign Chips – Report

“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.

IDM 2.0

Gelsinger also opened up about Intel’s new $20 billion strategy, dubbed “IDM 2.0” because of its transformation of Intel’s integrated device manufacturing model (wherein it both designs and manufactures chips for third parties).

This will allow Intel to better position itself to weather the challenges and build a more resilient supply chain.

“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,” he was reported as saying.

“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,” he said.

Intel has also announced its first major customer for its new Intel Foundry Services business, namely Qualcomm.

Qualcomm will start to have its chips manufactured by Intel in the coming years using Intel’s upcoming 20A process.

No timeframe has been announced for when the first Intel-made Qualcomm chips will arrive.