Pat Gelsinger, CEO of the US company, expects huge supply gaps to remain despite the semiconductor industry scrambling to respond to the surge in appetite.
The executive visited Malaysia as Intel announced a US$7.1 billion investment to expand its back-end manufacturing capabilities and advanced packaging lines in the country over the next 10 years. Gelsinger expects the move to create over 4,000 new jobs.
The Malaysian Investment Development Authority had already flagged the package on Monday, saying the facility will be in Bayan Lepas, near an international airport in the northern island state of Penang.
Intel relies on Malaysia for some of its chip packaging operations, the critical final step in the semiconductor manufacturing process.
Gelsinger said the industry’s push to build capacity since the pandemic began nearly two years ago would take at least three years to yield results.
“The overall semiconductor shortage is quite significant and the semiconductor industry was growing about 5% per year before Covid,” he said at a news conference, describing it as approximately a US$500 billion industry at the time.
“Covid disrupted the supply chains, causing it to go negative,” Gelsinger continued. “Demand exploded to 20% year-over-year and disrupted supply chains created a very large gap … and that exploding demand has persisted.”
Gelsinger said the Malaysian investment is part of Intel’s continued capacity building in the US, Europe and Asia.
“It just takes time to build this capacity to respond to the spike” in demand, he said, highlighting “major” expansions at facilities in the US states of Arizona and New Mexico that have already been announced.
“I expect to announce our next major US site and our next major European site in the near future as well,” he said.
Senior minister of International Trade and Industry Azmin Ali also joined the event, where he said there would be limited disruption to the global semiconductor supply chain from his country’s government.
“I have assured Pat that there will be no longer lockdowns, only targeted ones,” he said. “Even during the last lockdowns, we had assured minimal disruptions to the supply chain as we know how important it is to the world.”
Movement restrictions including lockdowns that Malaysia and other Southeast Asian countries such as Vietnam imposed to fight the spread of Covid-19 dented production at factories run by foreign technology companies.
The government’s economic plan identifies the electrical and electronics industry as key to sustainable growth in Malaysia and to strengthening the country’s position in the global supply chain.
Investment authorities approved RM47.1 billion worth of investments in the sector in the first six months of 2021, a huge jump from RM5 billion in the same period the year before.