The scramble to end the semiconductor shortage

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This week has seen a number of developments for the global semiconductor shortage as several key players look at ways of tackling the issue that has put the automotive and electronics industries in a chokehold.

Both Nvidia and Intel have pledged to increase the production of chips ahead of US President Joe Biden's plea for CEOs and companies to do something to address the shortages.

Read more: EU's semiconductor plan "doomed to fail", says think tank

Intel is currently one of the largest electronics manufacturers on the planet and has cornered the market in the west alongside its primary CPU parts rival AMD.

Nvidia is planning to break into the CPU market to help deal with the crisis as a number of companies face cutbacks.

Nvidia is primarily known for the creation of GPUs - also known as graphics cards - essential for graphics rendering and machine learning in computers and AI tech.

Its push into expanding its portfolio comes nearly a year after its acquisition of Arm, which has seen some criticism over fears it may create a monopoly over the tech industry.

The company is set to release its new chip - codenamed "Grace" - in 2023 and combines a number of GPUs and Arm-based CPUs to produce a package that can handle the most advanced machine learning calculations.

It is set for first use in the scientific sector, in the advancement of AI technology, according to Nvidia's data centre executive.

While based on Arm technology, Nvidia first expressed interest in breaking into the CPU market back in 2019, when it planned to adapt its software to run on Arm's systems.

The global semiconductor shortage has seen shortages in chips for the electronics industry as well as in computing and tech, which has hampered the release of new products - of particular note is the shortage's effect on the launch of the new PS5 and Xbox One X console launches, which are still seeing staggered releases nearly five months post-launch.

Joe Biden addressed senior executives on Monday to alert them the shortage was having a severe effect on the US economy, urging them to invest in the domestic production of chips.

"We need to build the infrastructure of today, not repair the one of yesterday," Biden told the panel, adding that "China and the rest of the world [are] not waiting and there's no reason why Americans should wait."

The majority of chips used in the western world come from a small selection of companies such as the Taiwan Semiconductor Company, based in Hsinchu, Taiwan.

Read more: Global semiconductor shortage hits "crisis" levels

East Asia is currently the world's largest supplier of chips and much of European and US industry is dependant on the region.

The pandemic has not only seen a transition to greener engines owing to a significant slump in fossil fuel usage, but has also caused a demand boom for home electronics as more people work from home or look for things to do while furloughed.

This means chip demand has outpaced the supply, causing the shortage.

Reuters reports that Intel's CEO Pat Gelsinger is looking to start domestic chip production to supply to automakers.

The timeframe for achieving this goal is six to nine months.

Gelsinger said: “We’re hoping that some of these things can be alleviated, not requiring a three- or four-year factory build, but maybe six months of new products being certified on some of our existing processes.

“We’ve begun those engagements already with some of the key components suppliers.”

Production may commence at any of Intel's main plants, located in Oregon, New Mexico, Arizona, Israel or Ireland.

Biden has revealed there is bipartisan support for legislation aimed at the semiconductor industry.

The US President recently revealed a $2 trillion (€1.68 trillion) infrastructure programme to rebuild American industry. $50 billion (€42 billion) in funding is set to be aimed at the semiconductor shortage alone.

However, concerns have been raised as to whether the Biden administration can shake up US supply chains on short notice, particularly for an industry that often has production cycles of three to five years.

Read more: Automakers may have to overhaul supply chains to address chip shortage

Wedbush analyst Daniel Ives told the Associated Press there were currently no structural changes that could alleviate the shortage.

However, Intel's plans could help to deliver on negating the effects of the crisis in the short term.

The US currently only accounts for 12% of all chip manufacturing, down from 37% in 1990, according to the Semiconductor Industry Association. East Asia, primarily China, Taiwan, Japan and South Korea, currently operate a 70% market share.

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