The global chip scarcity is expected to remain until 2023, according to Intel’s CEO, who stressed that demand is continuing to rise due to the coronavirus epidemic, even as semiconductor manufacturers try to ramp up production.
Despite the semiconductor industry scrambling to respond to the rise in demand, Pat Gelsinger, the company’s CEO, anticipates big supply shortages to persist.
Intel announced a 30 billion ringgit ($7.1 billion) investment in Malaysia to increase its back-end manufacturing capabilities and innovative packaging lines over the next ten years when the executive visited the country. According to Gelsinger, the shift will result in the creation of roughly 4,000 additional jobs.
On Monday, the Malaysian Investment Development Authority announced the deal, stating that the facility would be located in Bayan Lepas, near an international airport in Penang’s northern island state.
Intel outsources some of its chip packing activities to Malaysia, which is a crucial last step in the semiconductor manufacturing process.
The industry’s push to build capacity since the pandemic began nearly two years ago, according to Gelsinger, will take at least three years to bear fruit.
“The entire semiconductor scarcity is fairly considerable, and the semiconductor industry was increasing about 5% per year before COVID,” he remarked at a press conference at the time, estimating the market to be worth $500 billion. COVID interrupted supply networks, forcing them to go negative, according to Gelsinger. “Demand increased by 20% year over year, and disrupted supply chains created a massive gap… and that explosive demand has continued.”
According to Gelsinger, the Malaysian investment is part of Intel’s ongoing capacity building efforts in the United States, Europe, and Asia.
“It simply takes time to construct this capacity to respond to the rise,” he added, pointing to “significant” additions at plants in Arizona and New Mexico that have already been announced.”In the near future, I hope to announce our next large U.S. site as well as our next major European site,” he stated.
Malaysia’s Senior Minister of International Trade and Industry, Mohamed Azmin Ali, attended the event and stated that his country’s government would only cause minor disruptions in the global semiconductor supply chain.
“I’ve convinced Pat that no more lockdowns will be implemented, only targeted ones,” he stated. “Even during the previous lockdowns, we ensured minimal supply chain delays since we understand how critical it is to the globe.”
Malaysia and other Southeast Asian countries, such as Vietnam, enacted movement restrictions and lockdowns to combat the spread of COVID-19, which slowed production at international technology companies’ factories.
The electrical and electronics industry is identified in the government’s economic plan as critical to Malaysia’s long-term prosperity and enhancing its place in the global supply chain. In the first six months of 2021, investment authorities allowed 47.1 billion ringgit in the industry, up from 5 billion ringgit in the same period the previous year.