Semiconductor chip shortage could extend through 2022: Marvell CEO
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The shortage in semiconductor chips, which is hampering production of products from computers and cars to toothbrushes and appliances, will last into 2022. Marvell Technology
“Right Now, Every Single End Market for Semiconductors is Up simultaneously. I’ve been working in this industry 27 Years, and I’ve never seen it happen,” Matt Murphy, CEO of Marvell, stated during an interview. CNBC Technology Executive CouncilEvent on Thursday. If it goes on as normal, with everything in order, then this will be very difficult, even for 2022.
While several chip producers have announced plans to expand factory capacity, Murphy, who noted his firm is fabless and works with contract manufacturers on its designs, said “that’s not going to kick in until 2023 and 2024 — so there’s this painful period.”
This is more optimistic than Murphy’s peers in the chip industry, who recently stated that they believe there will be a shortage next year due to new factories opening.
“We have always experienced cycles of ups or downs where supply has outstripped demand, and vice versa.” AMD CEO Lisa Su said Monday at the Code ConferenceBeverly Hills, California. It’s “This Time, It’s Different”
Su indicated that, while the first quarter of 2022 is expected to be “likely tight”, the second will be more severe once manufacturing capacity increases.
Su explained that it might take between 18 and 24 months to install a new plant. In some cases, even longer. These investments were made about a year ago.
AMD Rival IntelIt is one of those companies, which has been looking to increase its production. In March, it announced that they would be doing so. would invest $20 billionTwo new Arizona chip manufacturing plants.
TSMCMarvell works with, the largest contract manufacturer of semiconductors, to produce these products. also building a $12 billion factory in ArizonaThis is a. It announced that the firm would spend $100 billion in three years to improve its manufacturing capacity.
“Massive inventories”
Murphy indicated that there may be a solution to the shortage when the demand for some chip-using products falls.
Murphy explained that Murphy believes there’s no way for every sector of the electronics market to stay in the top, driving demand for the next 12 months. Murphy agreed. Murphy said, “I believe something has to give.” When it does, it should allow the industry’s total capacity to be consumed and then aligned with true demand.
Murphy stated that slowing down of demand may be caused by areas like the personal computer market. Micron TechnologySales guidance is lower than expected for the next quarter.
Sanjay Mehrotra, CEO of Micron Technology spoke on CNBC’s “The Next Big Thing” segment.Mad Money” Wednesday while PC end user demand is strongThe reason why some of these PC customers cannot fulfill their orders is that they aren’t getting enough parts to build them the computer.
Market intelligence firm IDC claims that more than 300,000,000 personal computers were sold worldwide in 2020. This is an increase of 268 million sales in 2019.
Some analysts had projected upwards of 400,000,000 PC sales over the next few years. Murphy, however, expressed reservations about this sales trend during the CNBC TEC event.
Murphy indicated that Murphy expects to see “massive pockets in excess inventory” when the job is done.
He said, “If you take a look at the number of masks, hand sanitizers, or toilet paper floating around, it was panic. There’s also a panic on semiconductors.” You order your order, and then it turns around.
The auto industry is still hard hit
Automotive industry is the one that would most welcome chip inventories relief. It has probably been hardest affected by the absence of semiconductors.
General MotorsAccording to Friday’s announcement, U.S. car sales in the third quarter were up by 3% fell by more than 30% year-over-yearThe chip shortage caused production to stop and inventory availability at dealers was reduced.
As a result of a shortfall in semiconductor chips, General Motors shut down all of its North American production plants last month. General Motors has had to limit the supply of its chips so that it can produce only profitable and popular vehicles like pickup trucks.
Due to the disruption in manufacturing due to chip shortages, U.S. auto sales will drop by at least 13% overall. according to industry estimates
However, many automakers believe that the issues may be solved soon.
Steve Carlisle (GM President of North America) stated that the semiconductor supply interruptions that impacted third quarter wholesale and customer deliveries were improving. As we move into the fourth quarter, the steady flow of vehicles being held at plants will continue be released to dealers. We have also restarted production at key crossover- and car plants and look forward to an even more stable environment throughout the fall.
Tesla CEO Elon Musk recently calledAccording to the company, there are a lot more chip manufacturing plants being constructed and we should have enough capacity next year.
Refocus the supply chain
Murphy claimed that the shortfall in semiconductors has changed some aspects of supply chain thinking.
According to him, “Even before pandemic struck there was tightening going on.” Chip companies must have a completely different perspective on supply entry. This is a strategic imperative for how you plan your capacities and your relationships with suppliers.
Murphy explained that there is more buyer willingness to purchase capacity in advance, or to sign up to take-or pay agreements. If the agreement was signed, the company would either receive the product directly from the supplier, or would pay a penalty.
He stated, “We view this as a strategic move to make our capacity strategic and not an afterthought.”
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