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Global Semiconductor Chip Shortage Could See 'Painful Period' Extend Into 2022: Marvell CEO

In a forecast released Sept. 23, firm AlixPartners estimated that the shortage will cost the auto industry $210 billion globally in lost revenue in 2021.

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The global semiconductor chip shortage that is impacting the production of automobiles and consumer electronics will last until 2022 and possibly beyond, according to the CEO of semiconductor company Marvell Technology.

"Right now, every single end market for semiconductors is up simultaneously; I've been in this industry 27 years, I've never seen that happen," Marvell CEO Matt Murphy said during a CNBC Technology Executive Council event on Thursday. "If it stays business as usual, and everything's up and to the right, this is going to be a very painful period, including in 2022 for the duration of the year."

While multiple chip producers, including Japanese chipmaker Renesas Electronics, Intel, and TSMC have all expressed plans to double down on manufacturing, Murphy noted "that's not going to kick in until 2023 and 2024—so there's this painful period."

Last month, consulting firm AlixPartners predicted the global semiconductor shortage will lead to 7.7 million fewer vehicles produced in 2021, costing automakers billions in lost sales.

In a forecast released Sept. 23, the firm estimated that the shortage will cost the auto industry $210 billion globally in lost revenue in 2021, a sharp increase from the May projections of $110 billion in forgone sales and 3.9 million fewer vehicles built.

"Everyone had hoped that the chip crisis would have abated more by now, but unfortunate events such as the COVID-19 lockdowns in Malaysia and continued problems elsewhere have exacerbated things," Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners, said in a statement.

Wakefield noted the current semiconductor crisis is just one of many supply issues that automakers are facing, along with a shortage of materials and labor.

But some industry experts have a more promising outlook for the future, and believe the chip shortage could settle down as early as next year as new factories that were planned last year begin to open and manufacturing capacity increases.

"We've always gone through cycles of ups and downs, where demand has exceeded supply or vice versa," AMD CEO Lisa Su said Monday at the Code Conference in Beverly Hills, California. "This time, it's different," she said, adding that while she expects the first half of 2022 to be "tight," the second half could see an improvement.

"It might take, you know, 18 to 24 months to put on a new plant, and in some cases even longer than that," Su said. "These investments were started perhaps a year ago."

Murphy said he believes the chip shortage may see a decline when demand for certain chip-using products finally begins to drop, allowing producers to meet demands.

"I think there's no way, from my point of view, that every segment of the electronics industry stays up and to the right, ripping demand for another 12 months; it doesn't make any sense," Murphy said on Thursday. "I think something's got to give. And when it gives that should free up the capacity in aggregate for the rest of the industry to go consume and ultimately align it with the true demand."

Still, carmakers in particular are facing stiff competition from the consumer electronics industry amid the supply in chips, leading many to cut production.

General Motors announced several weeks ago it was cutting production at six North American assembly plants due to the chip shortage, while Chrysler parent Stellantis NV said last week it was cutting additional production at three facilities in the United States and Canada. And Ford announced in late August that it would temporarily shut its Kansas City assembly plant, which builds its best-selling F-150 pickup truck.

Tom Ozimek contributed to this report.

By Katabella Roberts

Katabella Roberts is a reporter currently based in Turkey. She covers news and business for The Epoch Times, focusing primarily on the United States.

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