Companies that rely on semiconductors to provide their services could be in trouble.
The U.S. Department of Commerce this week released a report that says the median inventory held by chips consumers – automakers, medical device manufacturers and the like – has dropped from 40 days two years ago to less than five days in 2021.
If a COVID outbreak, a natural disaster, or political instability disrupts a foreign semiconductor facility for even just a few weeks, according to the report, 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. “With skyrocketing 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.
Raimondo pointed to President Biden’s $52 billion proposal to “revitalize our domestic semiconductor industry.”
“Every day we wait on this funding is a day we fall further behind,” she said. “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.”
The statistics came in the department’s Risks in the Semiconductor Supply Chain Request for Information (RFI) issued in September.
- 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. More than 150 responses from the world responded to the RFI.