US companies have less than five days’ supply of semiconductors

The median inventory of chips held by U.S. companies fell to less than five days in 2021 as global companies struggled to address semiconductor shortages.

This is according to the Department of Commerce’s Semiconductor Supply Chain Information (RFI) request, which was published in September 2021. It asked all parties in the supply chain, producers , consumers and intermediaries, to voluntarily share inventory, demand and delivery information. dynamic. It recorded over 150 responses from entities located across the globe.

The RFI showed that the median inventory held by organizations, including automakers and medical device makers, fell from 40 days in 2019 to less than five days in 2021.

The Commerce Department pointed out that if a COVID outbreak, natural disaster, or political instability disrupts a foreign semiconductor plant for just a few weeks, it has the potential to shut down a manufacturing plant in the United States, putting its workers and their families at risk. .

The report also found that demand for semiconductors was up to 17% higher in 2021 compared to 2019, and consumers are not seeing commensurate increases in available supply. The majority of semiconductor fabs are also running at 90% or more, meaning additional supply is limited without building new facilities.

Bottlenecks are more concentrated in specific semiconductor inputs and applications. This includes legacy logic chips used in automobiles and medical devices, analog chips used in image sensors and radio frequency, and optoelectronic chips, used for sensors and switches.

The main reason for these bottlenecks has been identified as the need for additional manufacturing capacity. Others include a lack of raw material inputs for semiconductors and other semiconductor-related components to assemble sub-parts for electrical devices.

“The semiconductor supply chain remains fragile, and it’s critical that Congress pass chip funding as soon as possible,” Commerce Secretary Gina M. Raimondo said. “With soaring demand and full utilization of existing manufacturing facilities, it is clear that the only solution to solving this long-term crisis is to rebuild our domestic manufacturing capabilities.

“President Biden has offered $52 billion to revitalize our domestic semiconductor industry, and every day we wait for that funding is a day we fall further behind. But if we fix this problem, we can create good jobs, rebuilding American manufacturing, and strengthening our supply chains here at home for years to come.

The United States had asked chipmakers and electronics manufacturers to voluntarily submit information on their production capacity, inventory and customers, to understand where bottlenecks may exist in the supply chain. global supply.

However, in October 2021, TSMC revealed that it was considering how best to meet demand without revealing sensitive customer information. The Biden administration has hinted it could reintroduce a law to compel companies to share data if they don’t comply with the request.