Semiconductor Shortage To Continue Says U.S. Department Of Commerce

A close-up shot of a semiconductor chip

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.”

A close-up shot of a semiconductor chip

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.

A close-up shot of a semiconductor chip

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. 

Source: RideApart, Reuters

Leave a Reply

  1. Trump tried bringing back usa based manufacturing.
    Biden is in bed with china
    Hopefully , ccp will send over some chips after they invade taiwan.

  2. Darren P you are an ignorant fool. In their race to cut costs and boost “shareholder equity” corporations in all industries raced to the cheap labor costs and lack of over site in Asia. This has happened over the last 50 years with the mantra of “trickle down economics”. We’ll what’s trickled down on the middle class is the Uber wealthy’s excrement as they fly over us in in their private jets.

    I spent 28 years in the semiconductor industry watching all our IP being given away to chase those profits while coring out our own manufacturing capacity. Donnie and his ilk were the hogs at the trough and his MAGA was nothing but BS to make willfully ignorant people like you look the other way.

    Now it takes several years and billions of dollars to build a semiconductor manufacturing plant, good luck with that.

    1. Been in uk manufacturing for 20 years
      Watched it wither away and companies disappear.
      If we dont bring back western manufacturing now, we are doomed
      Fool.