Intel Sees Chip Challenges Persisting Until ‘at Least 2024’

The struggle to secure enough chips in the US will linger until 2024 and possibly beyond, according to Intel. 

“The chip shortage cost the US economy $240 billion last year, and we expect the industry will continue to see challenges until at least 2024 in areas of foundry capacity and tool availability,” Intel CEO Pat Gelsinger said in a Thursday earnings call.  

The company also warned that manufacturing conditions could worsen if the COVID-19 lockdowns in China persist. For now, Intel said it’s been working to “mitigate” any disruptions from the current lockdowns in Shanghai, along with the war in Ukraine, according to Gelsinger. 

Despite the supply chain problems, there are signs that demand for PCs has been falling in recent months. Intel’s own Q1 earnings show that the company’s revenue for PCs dropped 13% year over year, partly due to sagging sales for lower-end products, such as Chromebooks.

At the same time, PC makers have been focused on selling existing product inventory over ordering new chips due to inflationary pressures. “We expect elements of this inventory burn to continue into Q2,” Intel CFO David Zinsner said during the earnings call. However, the company is forecasting demand will pick up in the second half of the year as Intel and other PC suppliers prepare to introduce next-generation chips and products. 

Others, including Nvidia and AMD, have previously said their chip supplies should significantly improve in this year’s second half.

Over the long-term, Intel is betting chip demand will continue to soar on the need for computing across the consumer and commercial markets. It’s why the company has been investing billions in establishing new chip factories in both the US and Europe.  

“In the supply chain, lockdowns in Shanghai and the war in Ukraine have demonstrated more than ever that the world needs more resilient and more geographically balanced semiconductor manufacturing,” Gelsinger added.