Intel CEO Pat Gelsinger expects the chip shortage to continue in 2024 due to a lack of production equipment and tools for chip production. Gelsinger commented during an interview with CNBC’s TechCheck on Intel’s first-quarter earnings. Although the company did well in the first quarter, the outlook for the second quarter is less positive, and Intel shares have taken a hit.
Semiconductor manufacturers face a number of challenges to meet demand, most notably shutting down production due to the Covid pandemic. However, Gelsinger explicitly linked the shortage to a lack of production equipment and difficulties in building new semiconductor plants or factories.
“This is part of the reason why we believe that the general shortage of semiconductors will now be carried over to 2024, from our earlier estimates in 2023, just because the shortage has already affected equipment and some of these factory ramps will be more challenging, “Gelsinger said. the program.
Although there are a number of chip companies at the bottom of the product lines, the Dutch company ASML Holdings is the only one that can produce extreme ultraviolet (EUV) technology, which is used to produce chips below 10 nm. And ASML recently said it could fulfill only 60% of orders for chipmaking tools this year.
“The demand we’re seeing right now is coming from so many places in the industry,” ASML CEO Peter Wenink said during a profit talk with analysts two weeks ago. “It’s so common. We have significantly underestimated the breadth of demand. I don’t think that’s going to go away. “
ASML does not create many EUV fabs. His list of EUV customers can be counted on one side – Intel, TSMC and Samsung. But these EUV factories are monstrous. The building is the size of a football stadium, while the production equipment inside is the size of a house. This is not trivial production and there is a reason why factories take two to four years to build.
In other words, what do you think is the bulk of the cost of these $ 20 billion factories that Intel is committed to building in Arizona? Certainly not the buildings, nor the electricity, nor the HVAC.
Although it has a customer base of about two dozen, semiconductor manufacturing equipment is a very big business. It was $ 50 billion in 2020 and it is is expected to grow to $ 84.8 billion in 2028
That’s one of the reasons Intel is expanding its business with Intel Foundry Services, which makes chips for other companies. Speaking to financial analysts about profits, Gelsinger said Intel Foundry Services reached $ 1 billion for the first time, and Intel now has more than 10 qualified opportunities in advanced stages of engagement, which together represent a deal value of more than $ 5 billion .
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