Chip Shortage Is Far Problematic Than Initially Thought
January 25, 2022Photo by Pedro Sandrini from Pexels
The chip shortage has had an adverse effect on everything from mobile devices to automobiles, and according to the U.S. Department of Commerce immediate intervention is needed. It has released the results from the Risks in the Semiconductor Supply Chain Request for Information (RFI). It says that President Biden’s proposed $52 billion investment to prop up American semiconductor production is vital here.
Said RFI suggests that median inventory held by chip consumers today is less than 5 days compared to 40 days in 2019. Apparently, a natural disaster or COVID outbreak that disrupts manufacturing at a foreign semiconductor facility has the potential of causing a shutdown in a manufacturing facility in the US. Less reliance on foreign entities could help bolster chip availability, locally.
What makes matters worse is the fact that demand for semiconductors has increased by 17% in 2021 compared to two years prior. But the available supply isn’t increasing to compensate for said demand. The majority of semiconductor facilities are operating at above 90% utilization, which is why the proposed $52 billion investment is necessary.
The bottlenecks are mostly affecting:
legacy logic chips (used in automobiles, medical devices, and other products), analog chips (used in power management, image sensors, and radio frequency), and optoelectronics chips (including for sensors and switches).
Since the pandemic is still causing all sorts of disruptions around the globe, it’s very unlikely that the supply disruptions can be eased without government support or intervention. If you would like to see the full report of the RFI it can be seen here and, in the blog, released by the Department of Commerce.
