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FTSE 250 group expects chip crunch to persist for another 2 years

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WOTTON-UNDER-EDGE, Gloucestershire (CU)_Over the past two years, manufacturers around the world have been grappling with a global semiconductor shortage, which has wreaked havoc on those in the domestic appliances and consumer electronics sector, as well as some of the largest carmakers in the world. Now as the industry attempts to bounce back from the effects of the pandemic, looking to meet soaring demand, a British engineering company says that the chip crunch is showing no signs of abating.

Renishaw is an engineering and scientific technology company headquartered in Wotton-under-Edge, Gloucestershire. It is involved in the manufacturing of precision measurement equipment used by automotive, electronics and aerospace industries. Although the FTSE 250 group uses chips in its own products, it is mainly involved in the supply of machine parts for semiconductor plants.

The firm’s chief executive Will Lee is of the view that tight supply of electronic components essential for the appliances, automotive and medical device sectors is likely to persist for years amid strong investment by chipmakers to increase production. “Talk is of supply challenges going on another couple of years,” he told the Financial Times. “That’s interesting in terms of demand. The fabs [semiconductor fabrication plants] we supply to are very complicated and sophisticated facilities.”

His views were shared by large semiconductor manufacturers, who say there is no quick end in sight for the supply issues. Back in October, IBM chief executive Arvind Krishna said the shortage was “more likely” to continue until next year or the year after, while the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Company, is set to invest up to $44 billion in order to boost production. Meanwhile, Renishaw has expanded its workforce by almost 5,000, to keep up with demand, as well as to reverse cuts it made at the start of the pandemic.

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