U.S Govt Flags Precarious State Of Semiconductor Supply Chain With Inventory Down To 5 Days, Urges Congress To Approve $52 Billion Plan To Enhance Domestic Chip Production

by Swarajya Staff - Jan 28, 2022 08:38 AM +05:30 IST
U.S Govt Flags Precarious State Of Semiconductor Supply Chain With Inventory Down To 5 Days, Urges Congress To Approve $52 Billion Plan To Enhance Domestic Chip ProductionPresident Joe Biden stands with Patrick Gelsinger, CEO of Intel
Snapshot
  • Highlighting the depths of the semiconductor shortage, the U.S Commerce department has urged the Congress to approve President Joe Biden’s proposed $52 billion in domestic semiconductor production.

    The Commerce Department said that chip inventory held by manufacturers (including automakers or medical device manufacturers) established that it has fallen from 40 days in 2019 to less than 5 days in 2021.

Highlighting the depths of the semiconductor shortage, the U.S Commerce department has urged the Congress to approve President Joe Biden’s proposed $52 billion funding plan to support domestic semiconductor production.

The Commerce Department said that chip inventory held by manufacturers (including automakers or medical device manufacturers) has fallen from 40 days in 2019 to less than 5 days in 2021.

"If a COVID outbreak, a natural disaster, or political instability disrupts a foreign semiconductor facility for even just a few weeks, it has the potential to shut down a manufacturing facility in the U.S., putting American workers and their families at risk." the department said in a statement.

“The semiconductor supply chain remains fragile, and it is essential that Congress pass chips funding as soon as possible,” said Secretary of Commerce Gina M. Raimondo.

“With sky-rocketing demand and full utilization of existing manufacturing facilities, it’s clear the only solution to solve this crisis in the long-term is to rebuild our domestic manufacturing capabilities." she added.

Highlighting the urgency to pass President Biden‘s proposed $52 billion to revitalize our domestic semiconductor industry, she said that every single day of delay in approving the plans means 'we wait on this funding is a day we fall further behind'.

The Commerce Secretary said that by passing the funding plan to bolster domestic chip manufacturing, U.S can create good jobs, rebuild manufacturing capabilities, and strengthen domestic supply chains for years ahead.

Semiconductor supply chain situation in U.S

The U.S government, through a RFI (request for information), had asked various players in the semiconductor supply chain – producers, consumers, and intermediaries – to voluntarily share information about inventories, demand, and delivery dynamics. More than 150 responses from the world responded to the RFI.

The Commerce Department found that demand for semiconductors is as much as 17 percent higher in 2021 than it was in 2019, and consumers aren’t seeing commensurate increases in the available supply.

The majority of semiconductor manufacturing facilities are operating at or above 90 percent utilization, meaning there is limited additional supply to bring online without building new facilities, the response to RFI revealed

"Bottlenecks are most concentrated in a specific semiconductor inputs and applications, including 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)." the Commerce Department said.

While the need for additional fab capacity was identified as the main bottleneck by the respondents, lack of raw material inputs for both semiconductors and the other components paired with semiconductors to assembling sub-parts for electric devices emerged as additional bottlenecks.

Also Read: Intel To Build A $20 Billion Leading-edge Semiconductor Chip Manufacturing Complex In Ohio, Set To Commence Production In 2025

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