US expects microchip shortage to continue

Washington – Microchip shortages, which have stymied post-pandemic recovery in the global automotive industry – and, in turn, the rubber & tire and many other sectors – are set to continue, US government officials have warned. 

In a 25 Jan release, the US department of commerce (Commerce) said the latest findings showed that existing semiconductor facilities are operating at full capacity amid rising demand.

A report also showed that inventories held by chips consumers, such as automakers and medical device manufacturers had fallen from an average of 40 days in 2019 to less than 5 days in 2021.

Demand for semiconductors is about 17% higher in 2021 than it was in 2019, and consumers aren’t seeing commensurate increases in the available supply, added the report cited by Commerce.

US manufacturers, warned Commerce, remain vulnerable to events, such as a Covid outbreak or natural disaster, that even just temporarily disrupted overseas semiconductor facilities.

Commerce, therefore, stressed the need for a proposal by president Biden to inject funding of $52 billion to revitalise the US semiconductor production industry.

“The semiconductor supply chain remains fragile, and it is essential that Congress pass chips funding as soon as possible,” said secretary of commerce Gina Raimondo.

“With sky-rocketing demand and full utilisation of existing manufacturing facilities, it’s clear the only solution to solve this crisis in the long-term is to rebuild our domestic manufacturing capabilities, added Raimondo.