Yahoo Finance Intel CEO on chip shortage: 'We have a rough road in front of us'
Companies big and small that rely on semiconductors as the lifeblood of their business may not want to hear Intel CEO Pat Gelsinger's guidance for when the chip crisis will end.
But, it's one of the most honest assessments yet of the current mess that is slowing production of everything from Whoop fitness straps to pickup trucks from General Motors and Ford to electric autos out of Tesla.
"With or without the CHIPS Act, we think we still have some rough road in front of us. And I've said we believe the chip shortage is at its worst right now. It will get incrementally better as we go through '22, but we expect the shortage to persist into 2023. It just takes that long to build capacity," Gelsinger said at the Yahoo Finance's All Markets Summit: The Path Forward.
Gelsinger wasted no time planting a flag in the ground to address the shortage upon taking over as Intel's CEO in February after a successful stint as CEO of VMWare.
Intel quickly committed itself to making chips for other companies in a bid to increase industry capacity back in March. As part of that ambition, Intel recently broke ground on two chip making foundries in Arizona that are projected to cost $20 billion. Intel expects both plants — dubbed Fab 52 and Fab 62 — to be completed by 2024.
Meanwhile, Intel rival Taiwan Semiconductor has said it would invest $100 billion over three years to boost capacity and alleviate stress on the supply chain.
The industry's biggest players are now waiting for the U.S. government to do its part and pass the $52 billion CHIPS for America Act. In June, the Senate signed off on the legislation — which aims to incentivize U.S. manufacturing of semiconductors. But, the bill is still being debated in the U.S. House of Representatives.
Gelsinger said he is ready to commit more capital to additional production capacity if the CHIPS Act is passed.
"If the CHIPS Act doesn't pass, if the European Act doesn't pass, we think the slope of the recovery dampens. if it passes, I'm announcing our next Fab, right? Shovels go into ground more rapidly if this gets put into place," Gelsinger added.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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