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AlwaysFree: Intel CEO Committed To Long-Term Investment Despite Chip Glut


  • U.S. producer hits the gas and the brake at same time, Gelsinger tells Davos

According to Nikkei Asia article published on January 20, 2023, running Intel amid dramatic changes in global semiconductor demand feels like hitting a car's brakes and its gas pedal at the same time, the U.S. chipmaker's chief executive said on Thursday.

Turmoil in the chip supply chain, caused by the spread of COVID-19 and rising geopolitical risks, has prompted major semiconductor companies to invest vast amounts of money toward building fabrication plants worldwide.

But the industry has fallen into oversupply due to the slowdown of the global economy and because of rapid acceleration in digital investment earlier during the pandemic.

"COVID created this enormous disruption," resulting in a massive global chip shortage, Intel CEO Pat Gelsinger told attendees at the annual meeting of the World Economic Forum here.

As everybody in the semiconductor industry "is struggling to catch up," suddenly "the economy changes. None of us forecast it," Gelsinger said. The industry is "on the way down" on the supply-demand cycle, he said.

But Gelsinger said "everybody still believes the semiconductor industry doubles this decade," and so "we have to keep making those long-term investments."

The CEO acknowledged the industry "needs to make some near-term reductions" in response to weak demand. But he stressed that "my long-term capital build-outs for leadership and capacity stay steady."

While Intel is spending billions of dollars to construct new fabs in the U.S., "I feel like hitting the brakes and hitting the gas at the same time," Gelsinger said.

Intel once dominated global market share of processors for personal computers. But in recent years the American company has surrendered leadership in cutting-edge chips to contract producer Taiwan Semiconductor Manufacturing Co.

Most of the global production capacity for high-end chips is concentrated in Taiwan. But "we are fixing that," Gelsinger said.

Intel plans to catch up with new fabs in the U.S., but he noted that "over three decades, we allowed our industry to go from 80% U.S. and Europe to 80% in Asia."

"That is the core issue ... and it will take decades to fix," the executive said.

Governments in the U.S., Europe, Japan and elsewhere have committed to spending billions of dollars on expanding semiconductor production within their borders, looking to protect against supply chain disruptions like those caused by the pandemic and reduce reliance on production in Taiwan.

Gelsinger backed these moves. "Europe should be able to say, 'I can meet my critical industry requirements.' So should the Americans," he said.

"We needed a global crisis to realize that we had allowed ourselves to become acutely dependent on single points of failure in the supply chain on critical aspects," Gelsinger said. Having a "balanced, resilient supply chain" is what "we should all be focused on."

Tags: All Products,AlwaysFree,English,World

Published on January 23, 2023 2:44 PM (GMT+8)
Last Updated on January 23, 2023 2:44 PM (GMT+8)