Despite Chip Shortage, Chip Innovation Is Booming – The New York Times

“It’s a bloody miracle,” said Jim Keller, a veteran chip designer whose résumé includes stints at Apple, Tesla and Intel and who now works at the A.I. chip start-up Tenstorrent. “Ten years ago you couldn’t do a hardware start-up.”

The trends are not necessarily good news for chip customers, at least for the short term. Scarce supplies of many chips have manufacturers scrambling to increase production, and are adding to worries in Washington about reliance on foreign suppliers. Extra demand could extend the shortages, which are already expected to last into 2022.

High demand was evident in earnings for chip companies last quarter, which ended in March. Revenue grew 27 percent, for example, at NXP Semiconductors, a big maker of auto, communications and industrial chips, even though it temporarily closed two Texas factories because of a cold snap.

The industry has historically been notorious for booms and busts, usually driven by purchasing swings for particular products like PCs and smartphones. Global chip revenue slumped 12 percent in 2019 before bouncing back with 10 percent growth last year, according to estimates from Gartner, a research firm.

But there is widening optimism that the cycles should moderate because chips are now used in so many things. Philip Gallagher, chief executive of the big electronics distributor Avnet, cited examples like sensors to track dairy cows, the flow of beer taps and utility pipes, and the temperature of produce. And the number of chips in mainstay products like cars and smartphones keeps rising, he and other executives say.

“This is a lasting growth cycle, not a short spike,” said Kurt Sievers, NXP’s chief executive.

A longtime industry watcher, Handel Jones, who heads the consultancy International Business Strategies, sees total chip revenues rising steadily to $1.2 trillion by 2030 from roughly $500 billion this year.

Giants like Apple, Amazon and Google more recently have gotten into the act. Google’s YouTube unit recently disclosed its first internally developed chip to speed video encoding. And Volkswagen even said last week that it would develop its own processor to manage autonomous driving.

Chip design teams are no longer working just for traditional chip companies, said Pierre Lamond, a 90-year-old venture capitalist who joined the chip industry in 1957. “They are breaking new ground in many respects,” he said.

Mr. de Geus said new growth was coming from what seemed like a problem: a slowdown in Moore’s Law, industry shorthand for the perennial race to shrink chip circuitry so chips do more with less silicon. In response, he said, some companies are using Synopsys tools to design entire systems and bundles of smaller chips that work like a single processor.