Commerce Dept. Reports That Some Manufacturers Have Less Than Five Days of Semichip Inventory
WASHINGTON—A new U.S. Department of Commerce report says many manufacturers that rely on semiconductors have only a few days worth of inventory at any time. The report is based on more than 150 responses to the Department's request for information from businesses that produce and use semiconductors. It found that the median supply of chips held by manufacturers has dropped from 40 days' worth in 2019 to less than five days' worth last year.
The limited supply means that disruptions to production overseas—such as those from weather or new Covid-19 outbreaks—could again lead to factory shutdowns and furloughed workers in the United States, according to the report. It notes that inventories are even smaller in what it terms "key industries."
A global supply crunch sparked by the pandemic and extreme weather in Asia has led to shortages and, in some cases, higher prices of cars, iPhones, washing machines and more — at a time when consumers have never been more reliant on tech devices. Last year, General Motors was forced to temporarily shutter production at most of its North American plants because of the chip shortage, and many other automakers slashed their production "The semiconductor supply chain remains fragile," the report states. "Demand continues to far outstrip supply." The report also found that "respondents did not see the problem going away in the next six months." Last December, U.S. Commerce Secretary Gina Raimondo said the shortage is unlikely to go away until "deep into 2022."
Jordan Crenshaw, vice president of the U.S. Chamber of Commerce's Technology Engagement Center, said the findings on the ongoing shortage "highlights the critical need for the United States to invest in expanding semiconductor capacity. Congress must get to work on fully implementing and funding the CHIPS Act," Crenshaw said in a statement.
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