Jan 21, 2022 - Economy & Business

No quick fix for chip shortage

Illustration: Aïda Amer/Axios

A steady drumbeat of investments in new American semiconductor factories should help solve the chip shortage in the long run — but for now, the problem persists.

Why it matters: The chip crisis has rippled through the economy, triggering price increases and product shortages and exposed an economic security issue.

Driving the news: Intel announced on Friday plans to build two chip plants in Licking County, Ohio, in a $20 billion investment to provide the critical component used in electronics, tools and vehicles.

  • Intel says it'll hire 3,000 workers at the 1,000-acre site in Ohio and could eventually invest $100 billion there, "making it one of the largest semiconductor manufacturing sites in the world."

The big picture: Chipmakers, spurred on by the Biden administration and a bipartisan push on Capitol Hill, have announced nearly $80 billion in investments in U.S. manufacturing since the start of 2021, according to the White House.

  • Those include a $17 billion Samsung factory in Texas, a $20 billion Intel site in Arizona, and an up-to-$30 billion Texas Instruments plant in Texas.
  • "Longer term this will provide additional, domestic fab capacity for leading edge devices that will be used in self-driving cars and other advanced automotive applications,” IHS Markit auto analyst Phil Amsrud tells Axios.

Yes, but: Chip plants take years to build. Intel's Ohio site won't come online until 2025. That means there won’t be any immediate impact from recent announcements.

The bottom line: The chip crisis is expected to ease somewhat in the first half of 2022 as existing plants catch up to demand, but experts expect shortages to continue popping up into 2023 and potentially beyond.

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