Interview with Taha Khalifa, Client Computing Group Sales Director, EMEA Territory, Intel Corporation

Sunday 11 Dec 2022

Taha Khalifa

What is the current situation of the chip industry, is it better or worse compared to previous months?

The unprecedented demand for semiconductor components and substrates posed an immense challenge for many industries, from smart devices such as phones, and appliances to automotive, including ours. The Covid-19 pandemic hugely disrupted semiconductor shipments as global demand skyrocketed, causing supply chain breakdown.

The shortage has continued to be felt for nearly two years due to the imbalance between supply and demand. As more and more people are using smart mobile devices, chipmakers have had to quickly increase production to meet the growing demand.

The industry's supply constraints currently demonstrate why it's critical to invest in capacity ahead of demand. We have recently announced the Integrated Device Manufacturer (IDM) 2.0 strategy, outlining the company’s investment plans of over $40B in the US and 80B in Europe over the next decade will surely make us a major provider of foundry capacity in the US and Europe and give us additional capabilities to reduce the ongoing chip shortage and better serve our customers globally.

These fabs will support expanding requirements of our current products and customers and provide committed capacity for foundry customers.

Intel’s investment will further boost Europe’s unparalleled innovation cluster and will have significant positive spillover effects throughout industries and member states.

Intel is on track to achieve its 2030 sustainability goals, including achieving net positive water use by conserving, recycling and reclaiming water, and funding local water projects that restore more fresh water than it consumes.

Will the present shortage last in the short, mid or long term, and what factors will contribute to hastening its stabilization?

We believe the global chip crunch could continue until 2024 due to the constrained availability of key manufacturing tools, serving as an obstacle to expanding capacity levels required to meet elevated demand.

If we look at the growing demand across industries, complemented by growing internet penetration triggered by the pandemic as more people work remotely, the demand will only increase, cementing the fact that a global shortage of semiconductors could take more time to be resolved.

Intel IDM 2.0 strategy combined with investment plans across the semi-conducto supply chain – from Researhc and devemplment to manufacturing to state-of-the art packaging technologies, will surely help add stability to this critical supply chain.

Additionally, as part of IDM 2.0, by strengthening our existing relationships with third-party foundries that manufacture a range of Intel technology – from communications and connectivity to graphics and chipsets – we can navigate this challenging environment with greater control over our supply chain. Furthermore, our ability to work with customers globally plays a pivotal role in overcoming the challenge.

Semiconductors are the underlying technology powering the digitization of everything and this is being accelerated by what CEO Pat Gelsinger calls the four superpowers - ubiquitous computing, pervasive connectivity, cloud to edge infrastructure and AI.  We intend to lead the industry by harnessing these superpowers for our customers’ growth—and our own.  

These four extraordinary technological capabilities have become major market forces. They will fundamentally alter how we experience technology and interact with devices, ranging from PCs to other connected devices, even our homes and cars.

The four superpowers will also exponentially increase the world’s need for compute by packing ever more compute processing capability onto ever-smaller microchips. This is where Intel plays and wins: Our semiconductors are the underlying technology empowering developers and enabling our customers’ innovations.


What lessons has the industry learned regarding the shortage?

I think there are two key takeaways from the past two years. Firstly, the importance of investment. The time spent investing in building a resilient ecosystem is a critical lesson organizations and industries have learnt as the chip shortage continues to bite.    

We are putting all our chips on the table. Last year, as part of our IDM 2.0 strategy, Intel announced an investment of nearly US$43.3 billion to expand our FAB (semiconductor fabrication sites) sites across the United States. These include two new FAB sites in Arizona at an investment of US$23.3bn, with plans to grow capability in New Mexico. In addition to this was a US$3bn FAB expansion in Oregon, and further investment of more than US$20bn to build two new fabs in Ohio. Additionally, our planned 80bn Euro investment over the next decade in Europ will add to the stability and geographic diversity of the supply chain.

This gives us superior agility in a supply constrained environment. As we plan to expand our presence in the U.S. and Europe in the coming years, this will help bolster a sustainable and secure global semiconductor supply chain.

The second is collaboration with partners. We are actively working with our supply chain partners to increase the availability of third-party materials and components to further improve output and also support the broader PC ecosystem.


Which industries that need chips will be back to parity sooner than others?

The crisis has been appalling for the global supply chain in the past two years. The automotive industry faced the most significant issues globally but is most likely to recover the fastest. The industry is undergoing a profound transformation as vehicles become electric, safer, smarter, and more connected. These trends are driving considerable growth, with automotive silicon revenues expected to double to US$115bn by 2030.

With the aim to facilitate faster recovery, Intel Foundry Services (IFS) is forming a dedicated automotive group to deliver a complete solution to automakers with three clear priorities.

The first is our 'Open Central Compute Architecture', where IFS will develop a high-performance, open auto compute platform that enables automotive OEMs to build next-generation experiences and solutions for their vehicles.

The second is our 'Automotive-Grade Foundry Platform', which enables manufacturing technologies that meet the stringent quality requirements of automotive applications and customers. IFS is targeting both leading-edge nodes and technologies optimized for microcontrollers and unique automotive needs, in combination with advanced packaging, to help customers design multiple types of automotive semiconductors.

And the third is ‘Enabling Transition to Advanced Technologies’, where IFS will offer design services and Intel IP to automakers, enabling them to take advantage of Intel's expertise from silicon to system design. The IFS Accelerator automotive program, announced last year, is designed to help automotive chipmakers transition to advanced process and packaging technologies and innovate with Intel's custom and industry-standard IP portfolio.


Why is the industry struggling despite being already in the post-Covid era?

Effectively the semiconductor industry is continuing to play catch up from the devastating effects of Covid-19 and the booming demand for chips. Companies have been placing inflated orders to ensure increased stock which also puts additional pressure on manufacturers. We have put some measures in place to try and stop over-ordering, but it is only a temporary fix for a larger problem.

According to the Semiconductor Industry Association, global sales of semiconductors saw a record US$556bn in 2021, up more than 26% on 2020, compounding the need for investment and capacity increases. Like many other semiconductor manufacturers, Intel has had to increase capacity and investment in response to the supply constraints. Our FABs are running at near capacity, but as global supply chains remain strained, increased demand only adds pressure on the semiconductor industry.

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