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Cisco expects the chip shortages to affect global supply chains for at least another six months. Even after that, it will be some time before the problems are really solved.

In an interview with the BBC, Cisco CEO Chuck Robbins says that the company does not expect any relief in the short term. The suppliers are working on more capacity, which will improve the situation over the next 12 to 18 months. Robbins identifies the shortage as a major problem, as semiconductors are used in almost everything.

Agains expectations, the demand increased

Robbins explains that at the start of the Covid-19 pandemic, the general expectation was that the demand for semiconductors would drop sharply. These forecasts, which were also made at Cisco, were also passed on to the companies’ suppliers. These suppliers then reduced their production capacity. To the shock of many companies, however, the demand for their products actually increased. Tech analyst Dan Ives says that the current demand is probably 25 percent higher than anyone could have expected. As a result, suppliers had to quickly scale up their production again, but this takes time. With demand now higher than expected, companies are placing even larger orders with chip manufacturers in the hope of getting ahead of the shortage. This only makes the problem worse, according to Robbins.

Intel and TSMC paint a similar picture

Cisco is not the only company that expects the chip shortage to remain a problem through at least the remainder of 2021. Earlier this month, both Intel and TSMC painted a similar picture. TSMC said it expects a slight decrease in automotive shortages in the coming quarter but that the shortage will reverberate through at least 2021 and probably most of 2022. The company is planning and building new factories, but they will not come online until 2023.

Intel recently decided to open its factories to produce chips for car makers. Before this production can get underway, a few more steps need to be taken, which would make it another six to nine months before the first chips for cars roll out of Intel factories. Intel believes that this will alleviate some of the pain of the shortages, but that it will be years before the problems are completely solved.

Tip: Router supplies take up to 60 weeks due to chip shortages