US Commerce Department Warns Severe Computer Chip Shortages

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  • Some manufacturers that rely on semiconductors are down to less than five days’ worth of inventory, according to a report released Tuesday by the Commerce Department, in the latest indication of the extent of the computer chip shortage.
  • Covid-19 outbreaks — could again lead to factory shutdowns and furloughed workers in the United States.
  • According to The limited supply means that disruptions to production overseas — such as those from weather or new Ovid-19 outbreaks — could again lead to factory shutdowns and furloughed workers in the United States.

According to a study released Tuesday by the Commerce Department, some semiconductor-dependent manufacturers have less than five days’ worth of inventories, the latest indicator of the magnitude of the computer chip shortfall as reported by CNN.

Chip manufacturers

The report found that the median supply of chips held by manufacturers has decreased from 40 days’ worth in 2019 to less than five days’ worth last year, based on more than 150 responses to a Commerce Department request for information from businesses that produce and use semiconductors.

Due to the limited supply, disruptions in overseas production, such as those caused by weather or new Covid-19 outbreaks, could result in factory closures and furloughed workers in the United States, according to the report.

It notes that inventories are even smaller in “key industries.”

“The semiconductor supply chain remains fragile,” the report states. “Demand continues to far outstrip supply.”

Global supply

A global supply deficit triggered by the pandemic and extreme weather in Asia has resulted in shortages and, in certain cases, higher costs for cars, iPhones, washing machines, and other consumer electronics at a time when consumers have never been more reliant on technology. Because of the chip scarcity last year, GM was obliged to temporarily shut down most of its North American operations, and several other automakers cut their output plans.

US Commerce Secretary Gina Raimondo told CNN in December that the shortage is unlikely to go away until “deep into 2022” .“The Commerce Department’s Tuesday report found that “respondents did not see the problem going away in the next six months.”

The Biden administration has been working to support the chip-making industry in the United States, both to alleviate current supply chain issues and to reduce America’s reliance on foreign production of critical components in the future.

National secutiry

The biggest bottleneck in the chip supply chain is capacity at semiconductor fabrication plants, called “fabs,” a problem that’s not easily solved quickly. Still, some chipmakers have jumped to contribute. Intel, Taiwan Semiconductor Manufacturing Company and Global Foundries have all announced plans to invest billions of dollars on new plants, including multiple in the United States. Just last week, Intel announced plans to invest another $20 billion to build a chip manufacturing complex outside Columbus, Ohio.

President Biden has urged Congress to act to address global semiconductor shortages. The CHIPS for America Act, which provides $52 billion in subsidies to boost domestic semiconductor production, was enacted by Congress but the monies have yet to be allocated.

“This is about national security, economic security and it’s about jobs,” Biden said last week of the need to increase US chip production.

Semiconductor products

In its report Tuesday, the Commerce Department said it had identified certain semiconductor products for which the supply challenges are most acute, including “legacy logic chips” used in cars, medical devices and other products, and “analog chips” used in image sensors.

“We will target our efforts moving forward on collaborating with industry to resolve bottlenecks” for those specific products, the report states.

The report is likely to bolster those calling on Congress to direct resources to the industry.

Jordan Crenshaw, vice president of the US Chamber of Commerce’s Technology Engagement Center, said the findings on the ongoing shortage “highlights the critical need for the United States to invest in expanding semiconductor capacity.”

“Congress must get to work on fully implementing and funding the CHIPS Act,” Crenshaw said in a statement.

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Source: CNN

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