How Intel has Seen the Silver-Lining in the Semiconductor Shortage

The current worldwide shortage of semiconductors has presented Intel with a golden opportunity to regain the title of the world’s leading semiconductor manufacturer. What caused the current semiconductor shortage, what challenges had Intel been facing, and how can this shortage help Intel?

The World-Wide Semiconductor Shortage

Recently, the world has been subjected to a shortage of semiconductors which has caused mayhem in most industries. The cause of this shortage is the result of global lockdowns to control the spread of COVID, but the link between COVID and semiconductor shortages is not direct. 

Initially, lockdowns saw businesses suspended their operations due to the inability to make sales, and this inability to make sales rippled through the supply chain. More specifically, automotive manufacturers stopped manufacturing cars, and since most modern vehicles are heavily reliant on semiconductors this saw semiconductor producers suspend their production in automotive parts.

When lockdowns were lifted, and businesses began to reopen their doors, automotive manufacturers also restarted the production of vehicles. However, the world quickly discovered that semiconductors could not be produced quickly to meet demand. In fact, semiconductors can take up to a year between an order request and shipment of functional parts due to the complexity in manufacturing.

This lack of automotive parts resulted in semiconductor manufacturers shifting their focus into manufacturing car parts, but this came at the cost of reducing the output of commercial semiconductors. One year on, and the world is now suffering a major shortage of components which is seeing many products out-of-stock including GPUs, smart devices, and cars.

Intel’s Many Challenges

The shortage of semiconductors has been beneficial to many semiconductor manufacturers. It is seeing a boost in sales, but Intel (who is the largest US manufacturer of semiconductors) has been facing problems even before the pandemic started. Despite being one of the world leaders in processor design, Intel has struggled to fabricate devices below the 10nm scale. Repeated failures in their attempts to produce 7nm devices have seen other companies such as TMSC take the lead.

However, Intel’s failure to deliver 7nm devices had a knock-on effect on Intel’s position in the CPU market. Simply put, Intel has two distinctive divisions in their CPU products; the CPU designers and the CPU manufacturers. The CPU designers design their next generation of CPUs based on what the CPU manufacturing department can offer, and this is where Intel was punished. 

Intel, having given the specification of their 7nm process to the design team, failed to deliver. This resulted in Intel being unable to release newer CPU designs to the market. From there, AMD was able to catch up and overtake Intel with regards to CPU technology. 

A Blessing in Disguise

The semiconductor shortages have been hard on many companies, but the estimated delay for new products being around two years gives Intel a golden opportunity to play catch-up. While manufacturers rush to meet the current semiconductor demand, many fabless companies are somewhat left in the dark and unable to continue designing new products. While these companies can in-theory design new parts, these parts cannot be manufactured and tested until the shortages are over. 

However, Intel designs and manufactures their own products, which allows Intel to continue their R&D into new chip manufacturing techniques. Furthermore, developing such technology can take years, and the shortage of semiconductors gives Intel the time it needs to regain its title as a world leader in CPU design.

Intel may also be able to take advantage of the latest move from the US government which seeks to provide funding and contracts to US-based IC manufacturers. This funding comes from the global shortage of semiconductors and the desire to make the US independent from outside nations for the manufacture of integrated circuits. While countries such as South Korea and Taiwan are allies to the west, their close proximity to hostile nations such as North Korea and China could see their manufacturing capabilities attacked, and this would have a detrimental effect on national security. 

Overall, Intel has been handed a golden opportunity to regroup, upgrade, and catch up to its competition. If Intel fails to take advantage of this, it will continue to fall behind other companies, and the introduction of ARM and RISC-V in everyday machines will eventually see Intel fizzle out into a company that produces fringe products.