July 26, 2021


Melts In Your Technology

Global computer chip shortage could last two years

Red Hat president and CEO Jim Whitehurst, gives a press conference on the second day of the Mobile World Congress (MWC) on February 27, 2018 in Barcelona.
The Mobile World Congress, the world's biggest mobile fair, is held in Barcelona from February 26 to March 1.  / AFP PHOTO / LLUIS GENE        (Photo credit should read LLUIS GENE/AFP via Getty Images)

Jim Whitehurst at Mobile World Congress (MWC) on February 27, 2018 in Barcelona. Photo: LLUIS GENE/AFP via Getty Images

The boss of IBM has warned that the global computer chip shortage that has bought factories around the world to a halt could last another two years.

Jim Whitehurst, president of the US tech company, told the BBC there was “a big lag between when a technology is developed and when a fabrication plant goes into construction and when chips come out”.

“Frankly, we are looking at a couple of years… before we get enough incremental capacity online to alleviate all aspects of the chip shortage,” Whitehurst said.

The logo for IBM is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 27, 2018. REUTERS/Brendan McDermid

The chip shortage spans across the globe, and many firms have suffered from production delays thanks to the pandemic. Photo: REUTERS/Brendan McDermid

A rapid change in remote working last year caused higher sales of personal computers. Savings built up during the pandemic have also been splashed out on things like TVs, new phones, computer game consoles, and new cars. The combination has created a shortage of computer chips, which are used in far more items today than they were even a decade ago.

The chip shortage spans the globe and many firms have suffered from production delays thanks to the pandemic. Apple (AAPL), the world’s biggest purchaser of semiconductors, was forced to delay the launch of its latest iPhone due to the shortage. Many major car manufacturers have been forced to temporarily halt production.

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IBM licenses its microprocessor technology to the world’s biggest chip makers, including Intel Corporation (INTC), Taiwan Semiconductor Manufacturing (TSM) and Samsung (005930.KS).

Whitehurst told the BBC that IBM would look at alternative ways to meet consumer demand.

“We’re going to have to look at reusing, extending the life of certain types of computing technologies, as well as accelerating investment in these [fabricating plants], to be able to as quickly as possible get more capacity online,” he said.

Earlier this year, TSM said shortages could continue into 2022. The company said that it plans to invest $100bn over the next three years to increase capacity at its plants. It came just days after Intel announced a $20bn plan to expand its capacity.

Read more: Jaguar Land Rover to suspend production at UK plants amid computer chip shortage

The boss of networking company Cisco (CSCO) has said the shortage is set to last for most of this year and could cause problems for up to 18 months.

“We think we’ve got another six months to get through the short term,” Chuck Robbins said. “The providers are building out more capacity. And that’ll get better and better over the next 12 to 18 months.”

The shortage could mean higher prices for consumers. Some manufacturers have already raised their prices for the second time in less than a year, while others are in the process of increasing them.

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