Tech CEO predicts end of chip shortage

A global semiconductor shortage is likely to wane by late 2022 into early 2023, but growing demand for chips in every industry underscores the need for diversification in the supply chain and increased U.S. production, said the Qualcomm CEO.

A nationwide shortage of semiconductors is wreaking havoc for several industries, from automobiles to healthcare, and the White House has warned of “escalating vulnerabilities” due to the shortage.

“One thing we determined is chips are important… chips are going to be an essential ingredient when we think of our economic growth, chips are going everywhere,” Qualcomm CEO Cristiano Amon told Fox Business on Thursday.

“Where we are right now: We still have more demand than supply, but we’re starting to see in the second half of 2022, a more balanced equation. I think as we enter 2023, we’re going to get out of the crisis,” he added.

Amon added some companies might not see supply chain issues from the chip shortage ease until 2024.

Sen. Steve Daines, R-Mont., said at a “Montana on the Rise” economic summit, hosted by Daines and the Montana Chamber of Commerce, that the U.S. share of semiconductor fabrication was nearly 40% in 1990, but is now 12%.

“This is becoming a national security issue, and unless we reverse it now, it’s only going to become worse,” he said. “China is heavily invested in their production, we’re in a race.”

Ninety-two percent of the world’s most advanced semiconductors are manufactured in Taiwan, with the other 8% being manufactured in South Korea, according to a 2021 report from the Boston Consulting Group and the Semiconductor Industry Association.

Amon said aside from geopolitical struggles, even the threat of natural disasters necessitates the need for diversity in the semiconductor supply chain.

“If we know as an industry that we are going to have to double the total manufacturing capacity of semiconductors for the next 10 years, why not build that in the United States? Why not build that in Europe?” he asked.

Aman said there are several lessons the industry can learn from the global semiconductor shortage.

One lesson, he said, is “the importance of building a reliable supply chain for semiconductors, one that is geographically diversified, one that can actually support demand.”

“The reality is, semiconductors are going to be essential to everything going forward, especially as everything gets connected to the cloud,” he added.

The global semiconductor industry, which was worth $550 billion in 2021, is expected to reach $820 billion by 2028, according to a report from Blue Wave Consulting.

Amon said another lesson from the semiconductor shortage was a “misunderstanding of the industry, especially as we entered the pandemic.”

The expectation, Amon said, was that the world would go into a recession, and there would be no need for capacity of semiconductors.

“The reality was absolutely the opposite,” he added.

Federal Reserve Chairman Jerome Powell previously predicted that the semiconductor shortage would last beyond 2023, and the CEO of Volkswagen said the shortage would not correct itself until 2024. Fox Business