Chip Shortage To Last A Few Years, Warns Michael Dell

Michael Dell, the CEO and founder of Dell Technologies, has painted a gloomy picture about the current silicon shortage across the globe.

Dell is the world’s third largest personal computer vendor, behind Lenovo and HP, but even it is feeling the issues from the chip shortage that is hurting multiple industries including car and electronic makers.

And Michael Dell has warned that the chip shortage is not going away soon, and may take a number of years to resolve.

Chip shortage

Reuters reported Michael Dell telling the Handelsblatt newspaper that the silicon shortage is proving a challenge for computer manufacturers, and the shortage is likely to persist for some years.

“The shortage will probably continue for a few years,” Michael Dell reportedly in an interview published on Tuesday. “Even if chip factories are built all over the world, it takes time.”

Despite Dell being one of the largest PC makers in the world, and is one of the most important customers for many chip makers, it still had to pay a premium to secure supply, Dell reportedly added.

In particular, older and cheaper semiconductors are hard to get hold of, he said.

“We are talking, in particular, about components that are in the $1 range and are used practically everywhere,” he said. “But even newer technologies are not easy to come by.”

Why is it happening?

Last week the US Commerce Department asked Taiwanese chipmakers to prioritise the needs of American car makers suffering from the ongoing silicon shortage.

Forrester Research recently warned it expects the chip supply issues to extend through next year and into 2023.

The chip shortage is the result of a perfect storm of events, namely increased demand for electronic devices due to people being housebound during the Coronavirus pandemic, as well as US sanctions against Chinese tech firms.

The car industry itself has been hit hard as it tends to not carry large amount of stock, and it scaled back chip orders at the start of the global pandemic in early 2020, only to see strong demand for new cars.

And the issue has quickly become a political priority around the world.

The US Senate has drafted a compromise bill that would fund $95 billion (£67bn) for research into cutting-edge high-tech areas, as well as creating a White House “chief manufacturing officer” to help prioritise America’s manufacturing base.

Executive order

It should be remembered that US President Joe Biden has already signed an executive order back in February to tackle a number of pressing shortages for four critical products.

That included semiconductor chips, electric vehicle batteries and rare earth minerals.

President Biden also announced he would seek $37 billion in funding to ‘supercharge’ chip manufacturing in the United States, and try to lessen its reliance on chip manufacturing in Asian factories.

On 12 April President Biden also met with the CEOs of nearly 20 major companies in the United States to discuss the global semiconductor shortage.