While companies like Intel continue to open up new production lines to help match the growing demand, this is a solution that will only bear fruit long-term. Until then, the global chip crisis keeps getting snowballed by external factors such as the recent skyrocket in the price of neon, a noble gas used for lasers in chip manufacturing. Neon’s price on the market increased sixfold from December 2021 to March 2022 as a result of the mounting political tensions in Ukraine.

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Taking this into account, Intel CEO Pat Gelsinger told CNBC in a recent interview that the global chip shortage would last for a few more years, as the strain on key manufacturing tools has extended Gelsinger’s initial projection of 2023. He went on to say that while Intel’s chips were close to meeting demand, the global semiconductor shortage is now expected to drift into 2024 at the very least.

The effect that Russia’s invasion of Ukraine has on the global supply of neon cannot be understated, given that Ukraine produces around 50% of the world’s neon supply as a byproduct of Russia’s steel industry. Furthermore, Ukraine is responsible for 90% of the semiconductor-grade neon used in the United States. While companies have attempted to find alternative sources of neon through noble gas manufacturers in China, increasing neon production will take several months.

Until then, consumers and manufacturers alike will have to continue navigating a volatile landscape of artificially increased retail prices caused by scalpers, or the numerous supply chain failures that have caused companies like Nintendo to produce its Switch console in significantly fewer numbers than initially projected.

Pat Gelsinger is hardly the only voice with cynical projections on the global chip crisis, as IBM believed the semiconductor shortage would last until 2023 or 2024, as early as May of last year. Gelsinger concluded that between the supply chain lockdowns in Shanghai and the war in Ukraine, recent events have demonstrated more than ever that the world needs more resilient and more geographically balanced semiconductor manufacturing.

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Source: CNBC