The Commerce Department said Tuesday that a survey of semiconductor chip makers and users showed that chip shortages will persist in 2022, largely triggered by wafer capacity.
The report, based on more than 150 companies in the chip supply chain, shows that "there is a serious and ongoing mismatch between chip supply and demand, and the companies surveyed believe that these problems will not disappear in the next six months."
U.S. Commerce Secretary Gina Raimondo said it would "involve industry in solving the problem of specific nodes in the coming weeks, and will also investigate claims that these nodes are unusually expensive." ”
The current demand for chips is high and getting higher, with demand about 20% higher than in 2019 levels, but the supply has not increased accordingly. There isn't much good news in this survey.
In addition, she warned that U.S. companies remain vulnerable to weakened supply chains, with some companies likely to be forced to temporarily close or lay off employees.
The government is powerless to address supply chain bottlenecks
As early as Biden took office, he signed Executive Order 14017 "America's Supply Chains" in Executive Order 14017 "America's Supply Chains", ordering the study of supply chain problems and solutions.
In June, Biden set up a "Supply Chain Disruption Task Force" and unveiled its core supply chain plan, which aims to control the supply of multiple key products, from drugs to chips, in a multi-pronged manner. Since then, the Biden administration has also introduced various measures to prepare for short-term repairs and long-term restructuring of the US supply chain.
Ironically, the Commerce Department's report all but acknowledges the government's inability to address supply chain bottlenecks.
The Commerce Department said the median consumer inventory of key chips has fallen from 40 days in 2019 to less than 5 days in 2021.
5 days of inventory is extremely telling. Any disruption by overseas manufacturers, such as the outbreak of COVID-19 in clusters within factories or weather-related events, can lead to production halts or even shutdowns at U.S. factories. In the words of the Minister of Commerce himself, it is:
From my point of view, there are many vulnerabilities in the current supply chain: 5 days of inventory shows that there is not much room for fault tolerance anymore.
The report notes that the average capacity utilization rate of semiconductor factories between 2020 and 2021 has reached 90%, which is much higher than the average of previous years. This is already very high for an industry that requires regular maintenance and a lot of energy. However, the supply and demand situation is not optimistic, and the median demand for chips in 2021 is 17% higher than in 2019, while the supply has not increased accordingly.
Chip shortages are particularly affecting medical devices, broadband and the automotive industry, the report said. Last year, several automakers, including General Motors and Ford, were forced to halt production at U.S. factories because of a "lack of cores."
Raimondo on Tuesday urged Congress to pass the Chip Act, a Chip Act that would release $52 billion in subsidies to encourage chip manufacturing in the United States. While the Senate has passed the bill, it has stalled in the House.