Shortly after taking over as CEO of Intel nearly two years ago, Patrick Gelsinger began forcing the company to increase its spending on building new facilities and mastering advanced lithography technologies. In his opinion, now that the global economy is in recession, it is important not to forego long-term investments in productive infrastructure.
As explained Nikkei Asian Reviewat the WEF in Davos, the CEO of Intel used a figurative metaphor to describe the tactics of the company’s behavior in the investment field after a sharp drop in demand for semiconductor components. “I feel like I’m pressing the gas and the brakes at the same time” said Patrick Gelsinger. On the one hand, he acknowledges that the post-pandemic demand drop has forced the industry to cut some costs in the short term. On the other hand, the company is willing to continue investing billions of dollars to build new facilities in the US and abroad.
According to Gelsinger, the COVID-19 pandemic has created a huge gap between supply and demand that has led to a shortage of chips. At a time when all market participants were trying to keep up with demand, economic conditions have changed and no one could have predicted this. The industry is now in the phase of a decline in demand, as the Intel boss added. At the same time, the company’s own plans to build and achieve leadership positions remain unchanged.
The Intel boss came back to the topic of the high concentration of chip production in Asia. In three decades, 80% of capacity has shifted from the US and Europe to Asia, and Gelsinger says it will take decades to correct that imbalance. Europe should be able to say it can stock up on critical components, and Americans should be able to do the same. “We all need to focus on building a reliable and balanced supply chain. The world had to go through a crisis to understand that we have become dependent on the sole suppliers for critical aspects.” Patrick Gelsinger sums it up.