NXP CEO Sees Chips Shortages Persisting 'at Least' Into 2022
The “current expectation” at NXP Semiconductors is for the “tight supply environment” in the chips industry to persist “for at least the remainder of 2021,” said CEO Kurt Sievers on a Q1 earnings call Tuesday. As many of NXP’s customers…
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began resuming full production during Q3 of 2020, “we were faced with the challenge to balance a very accelerated rate of customer orders versus a very tight, if not sold-out, wafer supply situation,” he said. Though NXP’s foundry suppliers “have attempted to address our needs, it really has not been enough, and we were supply constrained in quarter one,” he said. “This supply trend will continue through quarter two.” Amid continuing strong Q2 demand, including expected mobile revenue growth in “the mid-30% range” and 80% growth in automotive compared with the 2020 quarter, “we continue to have low channel and low on-hand inventory, which we do not anticipate rebuilding this year,” said Sievers. “Our customers are responding by placing long-dated, non-cancelable and non-returnable order requests, and we are making long-term strategic supply commitments to our partners in order to assure future supply.” Compounding the challenging supply environment were the storms that disrupted Texas in mid-February, he said. “I am today pleased to share that our two wafer facilities in Austin are now fully back online,” he said. NXP is working “very, very diligently” with its tier one automotive OEM customers “on very prudently understanding the future demand patterns,” said Sievers. “One of the biggest learnings out of this current situation is to build much more transparency” into the supply chain, “knowing that we have a manufacturing cycle time of one to two quarters,” he said. “That work is underway, and I can certainly say we do this with all of the top 10 car OEMs in the world.” The industry’s semiconductor shortages are “really a long-term story,” he said.