Applied CEO Sees Continued Chip Shortages
"Supply-side” semiconductor inventories remain “below normal,” but “long-term demand drivers are strong, fueled by memory-intensive AI computing,” said Applied Materials CEO Gary Dickerson on an earnings call Thursday for fiscal Q3 ended Aug. 1. Demand for semiconductors “is no longer…
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about one or two killer applications, but rather an expansive structural shift in the economy toward digitization and automation,” he said. “Smart and connected devices at the edge not only consume more silicon, they are driving exponential growth in machine-generated data.” Though global consumption of silicon is accelerating, “adoption rates of new technology vary considerably by region,” said Dickerson. Applied estimates that by 2025, “China will have only reached the same levels of silicon spend per capita the U.S. saw in 2015, and India trails China by another eight to 10 years,” he said. As national governments “are increasingly recognizing the strategic importance of semiconductors,” and government R&D and production incentives become available in the U.S., Asia and Europe, “they can provide multiyear support as the industry moves from lean and just-in-time supply chains to more resilient, flexible and secure approaches, including regionally distributed capacity,” he said. But putting the right manufacturing infrastructure in place “is only one piece of the puzzle,” he said. “Investment in innovation infrastructure to lead in the development and commercialization of next-generation technologies is even more critical to winning the future.”