The global "chip shortage" of Cisco CEO: will continue for another half a year without homemade chips.

Affected by the Covid-19 pandemic and other factors, the "chip shortage" has continued to ferment in the past few months, forcing many companies to postpone production. And this situation may be difficult to alleviate in a short period of time. Chuck Robbins (Chuck Robbins), CEO of Cisco Systems, said the global chip shortage is expected to continue for most of this year.

"We think it will take another six months to get through the chip shortage," he said in an interview over the weekend. "

Recently, many technology leaders have talked about the lack of core crisis, and as the world's leading provider of network solutions, Cisco Systems supports 85% of Internet traffic, so Robbins' point of view carries a lot of weight.

At first, under the influence of the novel coronavirus pandemic, many companies cut chip orders because they thought demand would fall, which led suppliers to reduce capacity. However, demand for consumer electronics has risen sharply in the epidemic. A series of other factors, such as semiconductor factory fires and weather problems, have exacerbated the chip shortage.

Chip crisis urges suppliers to increase production capacity

Disruptions in the semiconductor supply chain have affected many technology companies. Robbins points out that this has prompted suppliers to build more capacity. "things will get better and better in the next 12 to 18 months," Robbins said. "

As demand for chips soars with the development of technologies such as 5G, cloud computing, the Internet of things and artificial intelligence, the expansion of capacity will be crucial. Robbins points out that the shortage of chips is a big problem, "because semiconductors are needed for almost everything."

Earlier this month, TSMC, the world's largest contract chip manufacturer, said it planned to invest $100 billion in expanding chip capacity over the next three years to build new factories around the world. South Korea's Samsung Electronics has also announced that it will spend more than $100 billion to expand its semiconductor business over the next decade.

Driven by ballooning demand, Intel, the largest semiconductor company in the United States, recently announced that it will invest 20 billion US dollars to significantly increase production capacity, including the construction of two new chip plants in Arizona in the United States. compete directly with TSMC in chip contract manufacturing business.

Dan Ives (Dan Ives), a technology analyst at Wade Bush (Wedbush Securities), a US investment bank, says the world's demand for chips is 25 per cent higher than expected.

Can't make their own chips.

Cisco recently completed a $4.5 billion acquisition of Acacia Communications, which works in businesses such as computer chip design. Robbins ruled out the possibility that Cisco would use the acquisition to start producing its own chips.

"We are not a chip manufacturing company, this is not our core competitiveness, chip manufacturing companies have better equipment and we are working closely with them," says Mr Robbins.

At present, the huge cost of building chip manufacturing facilities means that they are operating at almost full capacity, so it takes time to meet the growing demand.

Robbins says that, like other technology companies, Cisco's network equipment relies heavily on a steady supply of a range of chips. And some enterprises in the industry for fear of another shortage of large orders to increase inventory, which further aggravates the core shortage crisis.