According to the CEO of the semiconductor company Marvell Technology, the worldwide semiconductor shortage of chips affecting the production of cars and consumer electronic products is expected to last until 2022 or possibly beyond.
“Right now, every single end market for semiconductors is up simultaneously; I’ve been in this industry 27 years, I’ve never seen that happen,” Marvell CEO Matt Murphy said during a CNBC Technology Executive Council event on Thursday. “If it stays business as usual, and everything’s up and to the right, this is going to be a very painful period, including in 2022 for the duration of the year.”
While several chip manufacturers, including Japanese chip maker Renesas Electronics, Intel, and TSMC, have announced plans to increase the production process, Murphy noted, “that’s not going to kick in until 2023 and 2024–so there’s this painful period.”
Last month, the consulting company AlixPartners predicted that the world shortage of semiconductors would result in 7.7 million fewer cars made in 2021. This will cost automakers billions of dollars in lost sales.
In a report released on September. 23rd, the firm estimates that the issue will cause the auto industry to lose $210 billion in revenue in 2021. That’s a dramatic increase over the forecast of $110 billion lost revenue in May and 3.9 million fewer vehicles being built.
“Everyone had hoped that the chip crisis would have abated more by now, but unfortunate events such as the COVID-19 lockdowns in Malaysia and continued problems elsewhere have exacerbated things,” Mark Wakefield, who is the global co-leader of AlixPartners’ industrial and automotive practice at AlixPartners stated in an announcement.
Wakefield pointed out that the current semiconductor crisis is one of many supply problems that automakers face, in addition to an insufficient supply of material and labor.
Some industry experts are optimistic for the future and believe that the chip shortage could be resolved by the end of next year when new factories set to be built last year begin operating and the manufacturing capacity grows.
“We’ve always gone through cycles of ups and downs, where demand has exceeded supply or vice versa,” AMD CEO Lisa Su said Monday at the Code Conference in Beverly Hills, California. “This time, it’s different,” Su said, adding that although she anticipates the first quarter of 2022 will be “tight,” the second period could be more positive.
“It might take, you know, 18 to 24 months to put on a new plant, and in some cases even longer than that,” Su explained. “These investments were started perhaps a year ago.”
Murphy said that he believes the chip shortage could experience a decrease in demand as the demand for certain products that use chips eventually begins to fall, allowing manufacturers to meet demand.
“I think there’s no way, from my point of view, that every segment of the electronics industry stays up and to the right, ripping demand for another 12 months; it doesn’t make any sense,” Murphy stated on Thursday. “I think something’s got to give. And when it gives that should free up the capacity in aggregate for the rest of the industry to go consume and ultimately align it with the true demand.”
But, carmakers face intense competition from the electronics sector because of the abundance of chips, causing many to reduce production.
General Motors announced several weeks ago that it would be cutting manufacturing at Six North American assembly plants due to the shortage of chips. Chrysler parent Stellantis NV said it was reducing production at three plants in Canada, the United States, and Canada last week. Additionally, Ford announced in August that it would stop production at its Kansasitsy assembly plant, which produces the most-sold F-150 pickup.
Tom Ozimek contributed to this report.
By Katabella Roberts
Katabella Roberts is a journalist who is currently in Turkey. She writes about business and news in The Epoch Times, focusing mainly on Turkey and the United States.