Gecom CEO: Global chip shortage will last until next year

Global automotive chips are in serious short supply, car manufacturers are facing layoffs, and governments are worried about slowing down economic recovery after the epidemic.

Tom Caulfield, CEO of the world’s third-largest chip foundry, GlobalFoundries, said in an interview with CNBC on Friday (April 2) that the company’s production capacity has been booked out and the chip shortage is expected to last until 2022 or later.

The wave of semiconductor microchip shortages is causing chaos around the world, causing delays in car production and affecting the operations of some larger consumer electronics makers.

The shortage has spawned investment in global chip foundries, which are factories that semiconductor companies contract to make chips. Foundries, including Ge-core, are making investments of up to billions of dollars in new production lines and upgraded equipment to keep pace with surging demand and supply shortages.

Founded on March 2, 2009 and headquartered in the U.S., Ge-Core was spun off from the manufacturing arm of AMD. It is currently the third largest chip foundry in the world, with manufacturing facilities in the U.S., Germany and Singapore. It produces chips designed by AMD, Qualcomm, and Broadcom, among others. The parent companies are AMD and Advanced Technology Investments, a subsidiary of Abu Dhabi Venture Capital, an Abu Dhabi sovereign wealth fund, respectively. The company is considering an initial public offering in the first half of 2022 or sooner.

Caulfield said the shortage of chips in the automotive industry is not due to demand for leading node chips, but rather a shortage of components that cars are equipped with, such as radar chips, which do not necessarily require the most advanced manufacturing technology available today.

He explained, “The reason there is a chip shortage in the automotive industry is not because of a lack of CPUs, no one is saying I can’t build enough computers, it’s because of a shortage of other chips.”

Gecko mainly produces security chips for contactless payments, battery power management and touch screen drivers. These chips were initially used in large numbers in smartphones, but are now used in many products from cars to home appliances, which are also now facing a surge in demand for chips.

Most investments in chip foundries have been in the manufacture of cutting-edge, high-speed chips. But the situation began to change after the outbreak last year, when the market demand for electronic products such as laptops, monitors and game consoles rose.

These products, in addition to the CPU, also need a large number of other supporting chips. In addition, smartphones and computers also increasingly need non-leading node chips to connect to 5G networks or add additional cameras.

Caulfield said it will take several months for Ge-chip to increase the supply of chips on the market.

“Not only are all of our chip fabs running at over 100 percent right now, we’re adding capacity as fast as we can.” He said, “The capacity increase is not going to happen overnight.”

Caulfield added, “Since the epidemic, the semiconductor industry in the market is expected to grow at an average rate of 5 percent per year for the next five years. We expect that number to double. This is a structural shift, and the general demand for semiconductors in the market is accelerating.”