“It’s a bloody miracle,” said Jim Keller, a veteran chip designer with a background that includes jobs at Apple, Tesla and Intel and now works at the AI chip startup Tenstorrent. “Ten years ago, you couldn’t boot the hardware.”
These trends aren’t necessarily good news for chip customers, at least in the short term. The scarcity of chips has made manufacturers scramble to increase production, and is fueling fears in Washington about depending on foreign suppliers. Additional demand could prolong the shortfall, which is already expected to last through 2022.
High demand was evident in chip companies’ earnings for the previous quarter, which ended March. For example, sales rose 27% at NXP Semiconductors, a major maker of automobiles, communications and chips. industry, though it temporarily closed two factories in Texas because of the freezing incident.
The industry has long been known for boom and bust, often spurred by the purchase of specific products like PCs and smartphones. Global chip sales fell 12% in 2019 before rebounding back to 10% growth last year, according to estimates from Gartner, a research firm.
But there’s growing optimism that cycles should be moderated as chips are now used in so many things. Philip Gallagher, chief executive officer of major electronics distributor Avnet, cited examples such as sensors for monitoring dairy cows, flow of beer taps and utility pipes, and product temperature. . And the number of chips in flagship products like automobiles and smartphones continues to grow, he and other executives said.
“This is a long growth cycle, not a short-term spike,” said Kurt Sievers, CEO of NXP.
A longtime industry watcher, Handel Jones, head of consulting firm International Business Strategy, sees total chip revenue steadily increase to $ 1.2 trillion by 2030 from around $ 500 billion. in this year.