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Exam Number : ISS-003
Exam Name : Intel Server Specialist Certification
Vendor Name : Intel
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Chip shortage highlights U.S. dependence on fragile deliver chain | ISS-003 Latest Questions and test Questions

motor vehicle corporations across the globe have needed to idle production and worker's as a result of a shortage of semiconductors, commonly known as microchips or just chips. they are the tiny working brains inside well-nigh every modern equipment, like smartphones, sanatorium ventilators, even fighter jets. As they first reported in might also, the pandemic despatched chip demand hovering unexpectedly, as they purchased computers and electronics to work, analyze, and play from home. but whereas further and further chips are mandatory in the U.S., fewer and fewer of them are manufactured here.

Intel is the largest American chipmaker. Its most superior fabrication plant, or fab for brief, is located outdoor Phoenix, Arizona. New CEO, Pat Gelsinger, invited us on a tour to see how tremendously complicated the manufacturing process is.  

First, they had to suit as much as evade contaminating the fab: head-cover – on; bunny suit – zipped; goggles; gloves… ready to go.

Lesley Stahl: i'm pristine! 

Pat Gelsinger: every little thing in this atmosphere is controlled. 

collectively they stepped into a spot with one of the crucial most subtle new know-how on this planet. 

Lesley Stahl: I need to ask you why we're all yellow?  

Yellow filters remove light-rays that are harmful to the procedure. Overhead a computerized dual carriageway transports materials from one desktop to the subsequent. The manner comprises heaps of steps, the place layer upon layer of microscopic circuitry is etched onto these silicon plates - which are then chopped up into chips as a way to emerge as in, say, your desktop. Making only 1 can take six months.

microchipsscreengrabs03.jpg Pat Gelsinger suggests correspondent Lesley Stahl a silicon wafer.

Pat Gelsinger: You see, each one of these is a chip.

Lesley Stahl: Is a chip. i am stunned. i believed chips have been minute.

Pat Gelsinger: neatly, every one of these chips has might be 1000000000 transistors on it.

Lesley Stahl: Oh, my goodness!

Pat Gelsinger: So there's billion little circuits inside of it which are all on one of these chips. after which one wafer may have a hundred or 1,000 chips on it.

Intel's aim is to preserve shrinking the transistors' measurement, so that you can pile extra of them on a chip to make it more powerful and work quicker.

Pat Gelsinger: most of these is laying down circuits that are so a great deal smaller than anything else, your hair, you know, some other a part of human existence. You understand, a COVID particle is far larger than one of the lines that we're developing here.

Lesley Stahl: How plenty does this fab cost?

Pat Gelsinger: $10 billion dollars.

Lesley Stahl: Billion??

Pat Gelsinger: $10 billion 'trigger each and every one of those items of gadget is maybe $5 million. it really is a lot of hundreds of thousands of bucks.

Chips range in measurement and class depending on their conclusion-use. Intel would not at this time make many chips for the auto-sector but on account of the scarcity it's planning to reconfigure some of its fabs to delivery churning them out.

Lesley Stahl: i ponder, if we'll proceed to have shortages, now not just in automobiles, but in their telephones and for their computers, for every thing?

Pat Gelsinger: I suppose we've a couple of years unless they seize up to this surging demand throughout each point of the business.  

COVID showed that the international provide chain of chips is fragile and unable to react directly to changes widespread. One motive: fabs are wildly high priced to build, furbish, and maintain.

Lesley Stahl: it was once that there have been 25 agencies on this planet that made the excessive-end, reducing-facet chips. And now there are most effective three. And within the u.s.? – You.


Lesley Stahl: One. One.

these days, 75% of semiconductor manufacturing is in Asia. 

Pat Gelsinger: 25 years ago, the USA produced 37% of the realm's semiconductor manufacturing in the U.S. these days, that quantity has declined to simply 12%.

Lesley Stahl: doesn't sound respectable.

Pat Gelsinger: It would not sound first rate. And anyone who appears at provide chain says, "that's a problem." 

microchipsscreengrabs04.jpg   Pat Gelsinger

a problem as a result of counting on one place, specially one as unpredictable as Asia, is highly risky. Intel has been lobbying the U.S. government to assist revive chip manufacturing at home – with incentives, subsidies, and-or tax breaks, the style the governments of Taiwan, Singapore, and Israel have carried out. The White house is responding, proposing $50 billion for the semiconductor industry in the U.S. as part of President Biden's infrastructure plan.

Lesley Stahl: Your enterprise is extraordinarily profitable. when it comes to profits, you made $78 billion ultimate year. Why should the govt are available in to an organization, a business that is doing so neatly usual?

Pat Gelsinger: here is a large, essential industry and they want extra of it on American soil: the roles that they need in america, the manage of their long term know-how future, and as they have now also observed, the disruptions in the deliver chain.

Lesley Stahl: you have got spent an awful lot extra in inventory buybacks than you have in analysis and construction. a lot more.

Pat Gelsinger: They are usually not anyplace close as concentrated on buybacks going forward as they have in the past. and that's the reason been reviewed as part of my coming into the company, agreed upon with the board of directors.

Lesley Stahl: Why mustn't private business fund this as an alternative of the executive? The industries that rely on these chips - Apple, Microsoft, the businesses which are rolling in money?

Pat Gelsinger: neatly, they are relatively chuffed to buy from some of the Asian suppliers. 

really, they do not all the time have a choice. For chips with the tiniest transistors – there is no "made in the U.S." choice. Intel at the moment would not have the know-a way to manufacture essentially the most advanced chips that Apple and the others want. 

Lesley Stahl: The decline in this business. it's kinda devastating, is never it?

Pat Gelsinger: The undeniable fact that this trade become created by using American innovation-- 

Lesley Stahl: The entire Silicon Valley concept begun with Intel.

Pat Gelsinger: Yeah… The enterprise stumbled. You understand, it be nevertheless a large business - they had some product stumbles, some manufacturing and technique stumbles. 


in all probability the biggest stumble changed into in the early-2000s, when Steve Jobs of Apple vital chips for a brand new theory: the iPhone. Intel wasn't fascinated. And Apple went to Asia, at last discovering TSMC: the Taiwan Semiconductor Manufacturing business – these days, the world's most superior chip-company, producing chips that are 30% faster and more potent than Intel's. 

Lesley Stahl: they are ahead of you on the manufacturing side. 

Pat Gelsinger: Yeah. 

Lesley Stahl: significantly forward of you. 

Pat Gelsinger: They trust it be gonna take us a few years and they can be caught up. 

Gelsinger is making massive bets: breaking ground on two new large fabs in Arizona, costing $20 billion; Intel's greatest funding ever. And he introduced in might also a 3 and a half billion greenback Excellerate of this fab in New Mexico. 

but TSMC is a producing juggernaut price over a half a trillion greenbacks. taking part with consumers to supply their chip designs, it's been sought out by means of Apple, Amazon, contractors for the U.S. militia, and even Intel, which uses TSMC to supply its cutting-edge designs they may be no longer superior sufficient to make themselves.

Lesley Stahl: How and why did Intel fall behind?

Mark Liu: it's stunning for us too.  

microchipsscreengrabs18.jpg   Mark Liu

We spoke remotely with TSMC chairman Mark Liu on the business headquarters in Hsinchu, Taiwan. His business is a number one agency of the chips that go into American cars. In March, 2020, as COVID paralyzed the U.S. – motor vehicle income tumbled, main automakers to cancel their chip orders so TSMC stopped making them. it's why when automobile revenue all of sudden bounced again late ultimate year there turned into a shortage of chips: leaving automobiles without a vigour parked in carmakers' a lot - costing them billions.

Mark Liu: They heard about this scarcity in December timeframe. And in January, they tried to squeeze as extra chip as viable to the vehicle company. there is a time lag. In vehicle chips certainly, the supply chain is long and complicated. The supply takes about seven to eight months.

Lesley Stahl: may still americans be concerned that most chips are being manufactured in Asia these days?

Mark Liu: I be aware their difficulty, first off. but this is no longer about Asia or no longer Asia I mean, the shortage will take place no be counted where the construction is found since it's due to the COVID.

Lesley Stahl: however Pat Gelsinger at Intel talks about a need to rebalance the provide chain problem because so a lot, so many of the chips on earth now are made in Asia.

Mark Liu: I think U.S. ought to pursue to run faster, to put money into R&D, to produce more Ph.D., grasp, bachelor college students to get into this manufacturing container as an alternative of attempting to circulation the supply chain, which is terribly expensive and definitely non productive. so as to slow down the innovation as a result of-- people attempting to hang on their technology to their own and forsake the world collaboration.

in the world of global collaboration there is extreme competitors. Days after Intel introduced spending $20 billion on two new fabs, TSMC announced it will spend $100 billion over three years on R&D, improvements, and a brand new fab in Phoenix, Arizona, Intel's backyard, the place the Taiwanese business will produce the chips Apple wants however the americans cannot make. 

Mark Liu: That was a big investment. 

but there is a looming shadow over TSMC, which materials chips for their cars, iPhones, and the supercomputer managing their nuclear stockpile: China's President Xi Jinping, who has intensified his lengthy-time probability to capture Taiwan.  

China's makes an attempt to strengthen its own advanced chip industry have failed and so it be been forced to import chips. but ultimate yr, Washington imposed restrictions on chipmakers from exporting certain semiconductors to china. each Liu and Gelsinger concern the escalating trade warfare with China may additionally backfire, and in Intel's case: could damage business. 

Lesley Stahl: Are they your greatest client?

Pat Gelsinger: China is one in all their greatest markets these days. You know, over 25% of their earnings is to chinese shoppers. They predict that this may stay an area of anxiety, and one that must be navigated carefully. as a result of if there may be any features that americans cannot maintain running their countries or running their organizations as a result of deliver of 1 essential component like semiconductors, boy, that leads them to take very excessive postures on things because they must.

the most severe can be China invading Taiwan and in the manner gaining handle of TSMC. That could drive the U.S. to defend Taiwan as they did Kuwait from the Iraqis 30 years ago. Then it became oil. Now it be chips.  

Lesley Stahl: The chip business in Taiwan has been known as the Silicon safeguard.

Mark Liu: yes.

Lesley Stahl: What does that suggest? 

Mark Liu: That means the area all needs Taiwan's excessive-tech industry support. so that they will not let the warfare take place during this area since it goes in opposition t pastime of every nation on the earth.

Lesley Stahl: Do you feel that in any method your business is holding Taiwan safe?

Mark Liu: I can't touch upon the defense. I suggest, here's a changing world. no person desire these items to happen. and i hope-- i'm hoping no longer too-- either.

despite the world push to ramp up construction, the information is still grim. Some business leaders and analysts predict the shortage to closing deep into 2022, or even 2023.

Produced by means of Shachar Bar-On. associate producer, Natalie Jimenez Peel. Broadcast affiliate, Wren Woodson. Edited by means of Warren Lustig.

© 2021 CBS Interactive Inc. All Rights Reserved.

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