Cisco Says Computer Chip Shortage To Last Six Months

The boss of networking company Cisco said that the shortage of computer chips would persist for most of this year. Many companies saw production delays due to a shortage of semiconductors, which began with the government’s transition and was aggravated by other factors. Cisco president Chuck Robbins told the BBC: “We think it is six months more than the short term. “Cisco Computer’s Providers are promoting more capacity, and it will get better and better over the next 12 to 18 months.”

CISCO Technology Advancement

Advances in technology, including 5G, cloud computing, Internet of Things and Artificial Intelligence, will be important to expand that capability. Now, this is a big problem as they say, “because semiconductors go for almost everything.” Intel, a major U.S. The manufacturer, has announced a $ 20 billion (.514.5 billion) plan to significantly expand production, including two new plants in Arizona.

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According to Dan Eves, a technical analyst at investment firm Wetbush Securities, the current “demand may be 25% higher than anyone expected”. Although losses “will be an issue for the next three to six months”, technology stock prices are set by investors with a focus on increasing the long-term demand for their products.

US President Joe Biden also saw it as a long-standing issue, and the month called for a world leader in computer chips using a White House summit with business leaders. Amid the trade and technology war in China, the White House said it was “the first and immediate priority”. The United States-based semiconductor industry states that 75% of global production capacity is in East Asia. Taiwan’s DSMC and South Korea’s Samsung are the key players.

Politicians in European Market also want additional chips made locally, partly driven by concerns about China’s desire to reunite with Taiwan. Meanwhile, China has seen a tremendous increase in domestic demand for chips to promote new technology, but only a small fraction of global production capacity.

Mr Robbins said: “As long as you have a lot of resources, I don’t think it matters where they were built.” However, Intel CEO Pat Kelsinger told the BBC that it was not satisfactory that so many chips were being made in Asia. DSMC is set to become the world’s largest contract manufacturer and will spend $ 100 billion to expand its capacity over the next three years.

This week its founder, Morris Chang, called on Taiwan’s government to “hold on tight” and argue that it is better to make chips than the US or China, despite their large government support. Chip malfunction is further aggravated by corona virus infection. Initially, many companies have reduced orders for chips, thinking that demand will decrease, reducing suppliers’ capacity. However, demand for consumer electronics increased during the epidemic. The problems were exacerbated by several factors, including fire and weather problems at the semiconductor factory.

“It has created an unprecedented environment for the industry with technological developments,” says Paul Triolo, head of geotechnical consulting at the Eurasia Group.

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He thinks that it does not matter where the chips are made as long as the distribution varies. However, the shortage is “short-term” and requires a long-term solution to meet the production concentration of semiconductors, which is a “pre-deficit problem”. This is why Mr. Robbins said: “What we don’t like is that any risk we may face, and obviously, the situation we see today, will result. I think that the choices Needed.”

Cisco recently completed a $ 4.5 billion acquisition of Acacia Communications, which designs computer chips, among other things. Mr. Robbins banned the use of Cisco here as an opportunity to make his own chips. “We are not a fab semiconductor company, so we will not have the core competence to do this. So we feel that the companies that play in this space are better equipped, and we work with them.”

The huge cost of chip manufacturing equipment means they take longer to meet the increased demand as they run closer to full capacity. According to Mr. Triolo, the scale of demand is “unclear”. “Like other major technology vendors, Cisco Instruments relies too much on reliable supply chains for various semiconductors,” he said. The shortcomings, he said, “increased as companies ordered areas to produce cargo, fearing they would be caught again.”