Intel may begin manufacturing automotive chips to address industry shortage

Intel says it will open its factories to companies that design chips for cars, according to Reuters. The announcement comes following a visit to the White House by CEO Pat Gelsinger, who met with officials there to discuss a shortage of computer processors that has crippled the global computer supply chain for months.

Heretofore, Intel has only used its factories to produce its own chips, like the Core series of computer processors. Typically the chips used in cars are less challenging to make than the newer ones in smartphones and laptops, and Intel could theoretically take designs from manufacturers of automotive chips and begin using its own facilities to make those as well.

Pandemic woes — The shortages of chips for computers and cars are due to unrelated but similar issues. In the case of the former, the pandemic has caused huge demand for at-home entertainment, and at the same cryptocurrency miners have scooped up the latest graphics cards to capitalize on rising Ethereum prices, which allow them to pay inflated prices for chips knowing they’ll still make a profit. Only one manufacturer, Taiwan-based TSMC, is currently making the latest and greater 7nm processors at scale.

Shortages have hurt the automotive industry the worst by far, a situation that was caused after auto companies drastically cut their orders for chips in the wake of the pandemic, thinking sales would decline when they actually grew.

After American automakers cut their chip orders, factory capacity was sold to the electronics companies that have boomed during the pandemic. Intel, being the only major chipmaker with factories in the United States, could step in and begin producing chips within six to nine months, according to Gelsinger. The company is already considering opening up its facilities to other companies as Nvidia and Apple eat away at its market share. The former recently announced it will make its own chips designed for servers, an area Intel has dominated.

National security — The situation brought to light an existing concern about chip manufacturing, which is that not very much of it happens domestically and supplies can be affected by global events. The Biden administration has talked about semiconductor production as a national security concern and would like more of it to happen stateside so that countries like China don’t have significant leverage over American companies or an ability to steal trade secrets. Whether that actually happens remains to be seen — it’s believed that Intel has fallen years behind TSMC in its manufacturing abilities.