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Davos 2023: Rebalancing chip-supply chains will take decades

Allowing the semiconductor industry to become too dependent on Asia was a mistake and fixing it will likely take decades, Intel Chief Executive Patrick Gelsinger said.

“We needed a global crisis to realize we had allowed ourselves to become dependent on single points of failure in the supply chain,” Mr. Gelsinger told an audience at the World Economic Forum in Davos, Switzerland, on Thursday, referring to the recent chip shortage. “We need resilient supply chains for the future.”

Mr. Gelsinger said that just three decades ago, the U.S. and Europe accounted for 80% of the world’s chip output. Now, Asia accounts for that figure and the U.S. and Europe produce 20%, he said.

“It will take decades to fix,” he said.

Intel and other U.S. chip makers have committed billions of dollars to building new semiconductor capacity in the U.S. and Europe in the coming years, as policy makers have sought to reduce the West’s dependence on a handful of countries in Asia—in particular, Taiwan and South Korea—for chips.

Among the spending plans aimed at that target is last year’s $280 billion Chips and Science Act, designed to promote domestic semiconductor research and production. Intel and other U.S. chip companies pushed for the bill and are among its beneficiaries.

Mr. Gelsinger said Intel has adjusted spending plans slightly after the chip shortage that had hit a peak during the Covid-19 pandemic rapidly flipped to a glut, but he said the company’s big-ticket, longer-term investments remain on track.

“My long-term capital buildouts still stay steady,” he said. Wall Street Journal

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