According to Cisco, the shortage of computer chips lasts for six months

Network giant Cisco boss said the shortage of computer chips will continue for most of the year.

Many companies have seen production delays due to a shortage of semiconductors caused by Covid’s pandemic and exacerbated by other factors.

Cisco Chief Chuck Robbins told the BBC:

“Providers are building more capacity, and it will get better and better in the next 12-18 months.”

Capacity expansion is critical as demand increases significantly due to advances in technologies such as 5G, cloud computing, the Internet of Things, and artificial intelligence.

Semiconductors on circuit boards

Semiconductors power many consumer goods

Robins is a state-of-the-art tech boss who participates in the discussion, and his opinion is important because 85% of Internet traffic uses Cisco systems.

“For now, that’s a big problem, because semiconductors are used for virtually everything,” he says.

Seemingly insatiable demand is why Intel, a major US manufacturer, has announced plans for $ 20 billion (£ 14.5 billion) to significantly expand production, including two new Arizona plants.

According to Dan Ives, a technology analyst at investment firm Wedbush Securities, the current “demand is probably 25% higher than everyone expected.”

Although the shortage “will be a problem in the next three to six months,” technology stocks are strong as investors are paying attention to the long-term growing demand for their products.

President Biden and three advisers sit around the table and business leaders join with a video link

President Biden and his adviser held a virtual meeting to discuss tip shortages with business leaders

US President Joe Biden also saw this as a long-term issue and urged the country to become the world leader in computer chips this month using the White House Summit with business leaders. In the trade and technology war with China, the White House says it is a “top priority and immediate priority.”

The United States-based Semiconductor Industry Association states that 75% of the world’s manufacturing capacity is in East Asia. TSMC in Taiwan and Samsung in South Korea are the dominant players.

European politicians also want to make more chips locally, a view partially driven by concerns over China’s desire to achieve unity with Taiwan. On the other hand, China’s domestic demand for chips that support new technologies is growing significantly, but its share of the world’s manufacturing capacity is very small.

Robins said: “As long as there are multiple sources, I don’t think it doesn’t necessarily matter where they were created.”

However, Intel CEO Pat Gelsinger It “doesn’t fit”, told the BBC To have a lot of chips made in Asia.

TSMC appears to be intended to maintain its position as the world’s largest consignment manufacturer. Spend $ 100 Billion to Expand Capacity In the next 3 years.

This week, its founder, Morris Chang, told the Taiwanese government thatPlease hold firmly“Despite big government subsidies, it claims to be better suited for making chips than the United States or China.

Morris Chang

Morris Chang, the founder of TSMC, was seen here in November and wants the Taiwanese government to protect the chip industry.

The chip shortage was further exacerbated by the coronavirus pandemic. Initially, many companies reduced their chip orders and believed that demand would decrease, so suppliers reduced capacity. However, during the pandemic, the demand for home appliances increased.

The problem is exacerbated by a range of other factors, including fires in semiconductor factories and weather problems.

According to Paul Triolo, who heads geotechnology practices at consultancy Eurasia Group, this is coupled with “intergenerational technological change has created an unprecedented situation in the industry.”

He believes it doesn’t matter where the chips are made, given the diversity of supplies. However, shortages are likely to “continue for some time” and longer-term solutions are needed to address the “problem that precedes shortages”, the concentration of semiconductor manufacturing.

So Robins said: Whatever geopolitical risk is, it is the risk of a single point of failure. I think we need more options as to where semiconductors are built. “

Water truck arrives at TSMC factory in Taichung, central Taiwan

Water truck arrives at TSMC plant in Taiwan to address water shortages causing production problems

Cisco recently completed the $ 4.5 billion acquisition of Acacia Communications, which specifically designs computer chips. Robins has ruled out that Cisco will use Cisco as an opportunity to start manufacturing its own chips.

“We are not a semiconductor fab company, so it is not a core competence to do that. Therefore, I think the companies active in this area are much more well equipped. We are very close to them. We are cooperating. “

Chip manufacturing equipment is very expensive and is almost at full capacity, so it will take some time to meet the growing demand.

According to Triolo, the magnitude of that demand is “not clear.” “Cisco equipment, like other major technology vendors, relies heavily on the reliable supply chain of various semiconductors,” he said.

The shortage is “worried by companies over ordering components to increase inventory and is afraid of running out again,” he says.

You can see a full interview with Chuck Robbins “”Talking about business with Aaron Hesslhurst“” This weekend’s BBC World News is Saturday 2330 GMT, Sunday 0530 and 1630 GMT, Monday 0630 GMT and 1030 GMT, and Tuesday 1230 GMT.

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