Semiconductor Shortage To Continue Says U.S. Department Of Commerce
A survey by the U.S. Commerce Department has found that the ongoing semiconductor shortage will persist for the foreseeable future. The survey of 150 supply chain companies last fall confirmed: “there is a significant, persistent mismatch in supply and demand for chips, and respondents did not see the problem going away in the next six months.”
As RideApart reports, the global semiconductor shortage has impacted multiple industries, including automotive and powersports. Over 80 percent of the microchips in products consumed by Americans are manufactured in Asia, whose production has reduced following the pandemic. This has resulted in a severe shortage across the world. U.S. brands have reported that their 40-day microchip supply (as of 2019) has reduced to just a 5-day inventory (as of late 2021). This leaves them with almost no room for error.
As a result, companies like Bosch have increased investment in microchip manufacturing; however, it will be a while until new players can overcome the current deficit, irrespective of how established they are. House Democrats and President Biden are pushing for $52B of investment in semiconductor production and research to speed up the process further.
“Five days of inventory. No room for error” admitted Commerce Secretary Gina Raimondo. “That tells you how fragile this supply chain is.”
“There is a significant, persistent mismatch in supply and demand for chips, and respondents did not see the problem going away in the next six months,” summarized Raimondo.
Intel Corp. has also made advances in setting up its facilities — it plans to build two new semiconductor factories in Ohio. Samsung will also invest $17B in a new facility producing advanced chips in Taylor.
“Demand for chips is high. It is getting higher,” Raimondo concluded.
What does this mean for us? We’ve seen vehicle costs rise by over 10-15% over the last couple of years due to the shortage. This will likely continue until a more permanent solution is found.