Intel's Mexico unit sees 'light at end of tunnel' in chip shortages by year end

FILE PHOTO: An Intel Tiger Lake chip is displayed at an Intel news conference during the 2020 CES in Las Vegas, Nevada, U.S. January 6, 2020. REUTERS/Steve Marcus

MEXICO CITY (Reuters) - A global semiconductor chip shortage, which has hurt Mexico's auto industry, could improve but still not be fully resolved by the end of the year, said the head of Intel Corp's Mexico unit, Santiago Cardona.

Intel in late March said it will greatly expand its advanced chip manufacturing capacity with plans to spend as much as $20 billion to build two factories in Arizona and open its factories to outside customers.

The move aims to tilt a technological balance of power back to the United States and Europe as government leaders on both continents have become concerned about the risks of a concentration of chipmaking in Taiwan given tensions with China.

"There is light at the end of the tunnel, in that by the end of this year (supply) will be more normal," Cardona said in an interview late on Monday. However, he pointed out that the Semiconductor Industry Association has said it expects the chip shortage will not be fully resolved by then.

Automakers including General Motors Co, Ford Motor Co and Toyota Motor Corp have cut production this year due to the shortage, which led Mexico's auto industry to drops of 12% in production and 14% in exports during the first quarter.

Major automakers and suppliers will press Congress again on Tuesday to address the shortage that has curtailed auto production around the world.

Automakers have warned the shortage could result in 1.3 million fewer vehicles built this year in the United States and disrupt some production for at least another six months.

Cardona said the investment in Intel's two new factories is fully funded by the firm, although he did not rule out receiving incentives.

"We did not ask for (U.S. government) help, though we recognize that if there were support or subsidies, it would help us to do this even faster," he said

(Writing by Anthony Esposito; editing by Richard Pullin)

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