The global shortage of semiconductor chips will last for the better part of the current year, said the chief of the networking giant Cisco. The global chip shortage has caused production delays in many companies. The shortage was triggered by a sudden rise in demand for electronic goods as people were forced back home during the Covid-19 pandemic and forced to work from and attend school from home.
“We think we’ve got another six months to get through the short term. The providers are building out more capacity. And that’ll get better and better over the next 12 to 18 months,” said Cisco chief Chuck Robbins kin an interview to the BBC.
It is expected that there will be a bug surge in demand for chips because of advances in technology – including 5G, cloud computing, the internet of things and artificial intelligence, which makes the issue of expansion of capacity very crucial.
The opinion of Robbins matters because 85 per cent of internet traffic used Cisco’s systems.
“Right now, it is a big problem because semiconductors go in virtually everything,” he said.
Major US manufacturer Intel announced a $20bn plan to significantly expand production because of the seemingly insatiable demand.
According to Dan Ives, a tech analyst at investment firm Wedbush Securities, current “demand is probably 25% higher than anyone would have expected”.
Since investors are focused on the growing long-term demand for their products, technology share prices are doing well even though the shortage “is going to be an issue for the next three to six months”.
While viewing the current shortage as a long-term issue, United States President Joe Biden urged business leaders earlier this month to make the US a global leader in computer chips.
According to the White House says it is “a top and immediate priority”, even as its trade war with China carries on.
East Asia accounts for 75 per cent of global manufacturing capacity of chips, says the US-based Semiconductor Industry Association. Taiwan’s TSMC and South Korea’s Samsung are the dominant players.
European politicians also want European companies to make chips in the continent which is partly because of China’s aim of achieve reunification with Taiwan.
On the other hand, there has been a huge growth in domestic demand for chips to power new technology in China but the country only has a small share of global manufacturing capacity.
“I think that it doesn’t necessarily matter where they’re made, as long as you have multiple sources,” Robbins said.
However it was not “palatable” to have so many chips made in Asia, Intel chief executive Pat Gelsinger had said previously.
(Adapted from BBC.com)