The chip shortage shows no sign of slowing down, says Biden administration
Demand continues to greatly outweigh supply.
The global chip shortage that has been crippling the world for over a year is likely to continue. At least, according to a new report from the Biden administration. A recent Request for Information (RFI) revealed that the supply of chips is not likely to catch up this year.
The Biden administration (specifically, the Department of Commerce) initiated an RFI on the semiconductor supply chain to try and uncover the details behind the chip shortage.
The request found that there is an increase of about 17 percent in demand for certain chips. At the same time, there has been no nominal increase in supply. It concludes that there is a “major supply and demand mismatch.”
In a briefing announcing the results of the chip shortage RFI, Commerce Secretary Gina Raimondo shared some of the department’s findings.
One of the more interesting findings is that the average inventory of chips has fallen from 40 days in 2019 to less than five days now. That means that any disruption in chip manufacturing has the potential to halt manufacturing that requires those chips.
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Because of the fragile nature of the semiconductor supply chain, Raimondo urges that Congress pass the U.S. Innovation and Competition Act. The bill includes $52 billion in funding to create domestic long-term solutions to the chip shortage.
But even that kind of funding won’t solve the problem quickly. Intel recently announced a $20 billion silicon manufacturing facility, but that won’t be operational until at least 2025.
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If I had to guess, I’d say these findings are pretty telling and we will probably be feeling the effects of this chip shortage for quite a while.
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