Continued demand for semiconductors, Commerce Dep't calls situation "urgent"
On Tuesday, the U.S. Department of Commerce released the results from the Risks in the Semiconductor Supply Chain Request for Information (RFI) issued in Sept. 2021. Key findings from the report provided data-driven information about the depths of the semiconductor shortage and advocated for the White House’s proposed $52 billion in domestic semiconductor production.
The RFI showed that median inventory held by chips consumers (including automakers or medical device manufacturers, as examples) 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 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 in a January 25 press release posted on Commerce.gov. “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. President Biden has proposed $52 billion to revitalize our domestic semiconductor industry, and every day we wait on this funding is a day we fall further behind. But if we address this problem, we can create good jobs, rebuild American manufacturing, and strengthen our supply chains here at home for years ahead.”
Key Findings from the Semiconductor RFI:
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.
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 main bottleneck that respondents identified is the need for additional fab capacity. Additional bottlenecks that respondents identified include a lack of raw material inputs for both semiconductors and the other components paired with semiconductors to assemble sub-parts for electric devices.
The RFI asked all parts of the semiconductor supply chain – producers, consumers, and intermediaries – to voluntarily share information about inventories, demand, and delivery dynamics. With Secretary Raimondo’s engagement, more than 150 responses from the world responded to the RFI. The results of the RFI are included in a report and blog released by the Department of Commerce. The Department of Commerce says it will "continue to work on the short- and long-term challenges of the semiconductor supply chain through engagement with Congress to pass and fund USICA, coordination with the private sector to ensure more transparency within the supply chain, and the continuation of the early alert system to help address real-time semiconductor supply chain disruptions."