Narumon Bowonkitwanchai | instant | fake images
The semiconductor chip shortage that is hampering the production of products ranging from cars and computers to home appliances and toothbrushes will last until 2022 and possibly beyond, the semiconductor company’s CEO said. Marvell Technology.
“Right now, all the final semiconductor markets are growing simultaneously; I’ve been in this industry for 27 years, I’ve never seen this happen, ”Marvell CEO Matt Murphy said Thursday at a CNBC Technology Executive Board event. “If you continue as usual, and all goes well, it will be a very painful time, even in 2022 throughout the year. “
When several chipmakers announced plans to expand the plant’s capacity, Murphy, who noted that his company had no plant and was working with contract manufacturers on their designs, said that “it will not start before 2023 and 2024, so there is no this painful period. ” .
That’s a more pessimistic view than some of Murphy’s chip industry peers, who recently said they expect shortages to ease next year with the opening of new factories.
“We have always been through cycles of ups and downs, where demand has outpaced supply or vice versa,” AMD CEO Lisa Su said Monday at the Code conference in Beverly Hills, California. “This time it is different.
Su said that while he expects the first half of 2022 to be “probably tight,” the second half will be less severe as manufacturing capacity opens up.
“It can take, you know, 18 to 24 months to set up a new plant, and in some cases even longer than that,” Su said. “These investments started maybe a year ago. “
AMD’s rival Intel is one of the companies that has sought to double production and announced in March that it would invest $ 20 billion in two new chip factories in Arizona.
TSMC, which is the largest contract semiconductor manufacturer and works with companies like Marvell, is also building a $ 12 billion plant in Arizona. The company announced in April that it would invest $ 100 billion over the next three years to increase the plant’s capacity.
“Big inventory pockets”
Murphy said the shortage could be resolved as demand for certain chip-using products eventually wanes.
“I think there is no way, from my perspective, that all segments of the electronics industry remain in good shape, wrecking demand for another 12 months; it doesn’t make sense, ”Murphy said. “I think something has to give. And when that happens, it should free up overall capacity for the rest of the industry to go out and consume and ultimately tailor it to actual demand. “
The slowdown in demand could come from areas like the personal computer market, Murphy said, citing Micron Technology’s lower-than-expected sales forecast for the next quarter.
Micron Technology CEO Sanjay Mehrotra told CNBC’s “Mad Money” on Wednesday that while end-user demand for PCs is strong, “some PC customers are unable to meet their demand because they are not getting enough of all the components needed to build the PCs. “
More than 300 million personal computers were sold in 2020, according to market intelligence firm IDC, up from 268 million in 2019.
This has led some analysts to project more than 400 million PC sales in the coming years, but it is a sales trajectory that Murphy voiced his doubts about at the CNBC TEC event.
Ultimately, Murphy said he expects there will be “big bags of excess inventory when this is all over.”
“If you look at the amount of masks, hand sanitizers or toilet paper circulating, there has been panic, and there is panic buying semiconductors right now,” he said. “At one point you ask for an order and it goes the other way around. “
The automotive industry is still very affected
Any relief from chip inventory would be welcomed by the auto industry, which has perhaps been hit the hardest by the semiconductor shortage.
General Motors said on Friday that US vehicle sales in the third quarter fell more than 30% year-on-year as a shortage of chips halted production and reduced inventory available at dealerships.
Last month, the automaker again shut down production at most of its North American factories due to a lack of semiconductor chips. This shortage has forced General Motors to move its available chips only to its most popular and profitable vehicles, such as pickup trucks.
Overall, US auto sales are expected to fall by at least 13% in the third quarter due to production disruption linked to chip shortages, according to industry estimates.
Still, several automakers have suggested that these problems could be fixed soon.
“Semiconductor supply disruptions that affected our wholesale and customer shipments in the third quarter are improving,” Steve Carlisle, GM’s president for North America, said in a statement. “As we look to the fourth quarter, a steady stream of retained vehicles at factories will continue to be distributed to dealerships, we are restarting production at major crossover and auto factories, and we expect a more favorable environment. More stable operation until fall. ”
Tesla CEO Elon Musk recently called the semiconductor chip shortage a “short-term” problem, saying “there are a lot of chip factories under construction and I think we’ll have a problem. Good capacity next year.”
Refocus the supply chain
Murphy said the semiconductor shortage has changed some of the thinking when it comes to the supply chain.
“Even before the pandemic happened, there was a tightening,” he said. “The chipmakers really need to have a different view now of the sourcing entry, it is a strategic imperative in terms of planning their capacity, their relationships with their suppliers. “
Buyers are more willing to pay for capacity up front or enter into binding purchase agreements, which would mean that the company would either take the supplier’s product or pay a fine, Murphy said.
“We see this as a strategic shift toward strategic capability, not just an afterthought,” he said.