Intel CEO: "Semiconductor Supply Shortage Will Last 2 More Years"

Acceleration of Digitalization... Securing Production Capacity Takes Long Time
Supply Shortage Expected to Ease by End of This Year
7nm Technology Lagging Behind Samsung and TSMC to Be Secured Soon

Intel CEO Pat Gelsinger
Photo by Reuters Yonhap News

[Asia Economy Reporter Byunghee Park] Intel CEO Pat Gelsinger mentioned the surge in semiconductor demand and predicted that the supply shortage could continue until 2023. Gelsinger, who took office in February, expressed a strong willingness for mergers and acquisitions (M&A) and said that the problematic 7-nanometer (nm, 1 nanometer is one billionth of a meter) process technology from last year would soon be secured.

According to the Wall Street Journal (WSJ) on the 22nd (local time), Gelsinger said at the time of Intel's Q2 earnings release, "It will take about 1 to 2 years for the semiconductor industry to restore supply-demand balance."

Since the COVID-19 pandemic, a semiconductor supply shortage has caused production disruptions in the automotive, smartphone, and home appliance industries. This was due to the collapse of supply chains caused by COVID-19. The reason Gelsinger expects the supply shortage to be prolonged is focused on demand.

He explained, "Everything is becoming digitalized, and the speed of digitalization is accelerating," adding, "There is a tremendous growth opportunity approaching for the semiconductor industry, including Intel." He also predicted that the semiconductor supply shortage would begin to ease by the end of this year but said, "It will take a long time for the semiconductor industry to secure production capacity sufficient to meet the soaring demand."

Gelsinger also expressed a strong willingness for M&A to respond to the expanding demand. One month after taking office, in March, he declared Intel's re-entry into the foundry (contract manufacturing) sector, and recently Intel has been negotiating to acquire GlobalFoundries, the world's third-largest foundry company. The expected acquisition price is currently around $30 billion (approximately 34.5 trillion KRW). If successful, it would be Intel's largest M&A deal to date.

While being reserved about the acquisition negotiations, Gelsinger said that M&A would be a long-term industry consolidation process. He added that Intel could lead industry consolidation and hinted at aggressive M&A. He anticipated fierce competition due to expanding demand and said, "Small companies will not be able to keep up with the competition."

Regarding Intel's technological capabilities, Gelsinger said that the development of the 7nm process technology, which was problematic last year, is progressing well. Intel is still behind competitors like Samsung Electronics and TSMC as it has not yet secured 7nm process technology. Intel originally planned to secure 7nm process technology last year but delayed production plans by six months due to yield issues. The delay in the 7nm production process led to Bob Swan stepping down as CEO and Gelsinger returning to Intel after 12 years.

Intel is expected to announce additional detailed plans regarding future investments and technology development at its annual event scheduled for the 26th.

Intel's Q2 revenue and net income announced that day were $19.6 billion and $5.1 billion, respectively, surpassing Wall Street analysts' estimates compiled by FactSet Research (revenue $17.8 billion, net income $4.2 billion). Intel raised its full-year revenue forecast from $77 billion to $77.6 billion.

This content was produced with the assistance of AI translation services.