Computer Chip Supply Dangerously Low

The U.S. Department of Commerce released the results from the Risks in the Semiconductor Supply Chain Request for Information (RFI) issued in Sept. 2021. Key findings showed how extreme the semiconductor shortage is.

The U.S. Innovation and Competition Act proposes $52 billion in domestic semiconductor production.

Key Findings from the Semiconductor RFI

• Demand for semiconductors is as much as 17 percent higher in 2021 than it was in 2019, and consumers aren’t seeing commensurate increases in the available supply.
• The majority of semiconductor manufacturing facilities are operating at or above 90 percent utilization, meaning there is limited additional supply to bring online without building new facilities.
• Bottlenecks are most concentrated in a specific semiconductor inputs and applications, including legacy logic chips (used in automobiles, medical devices, and other products), analog chips (used in power management, image sensors, and radio frequency), and optoelectronics chips (including for sensors and switches).
• The main bottleneck that respondents identified is the need for additional fab capacity. Additional bottlenecks that respondents identified include a lack of raw material inputs for both semiconductors and the other components paired with semiconductors to assemble sub-parts for electric devices.

Commerce Secretary Gina Raimando explained that a lack of chips resulted in “$210 billion in lost revenue” for automakers in 2021…

“In 2021, auto prices drove one-third of all inflation, primarily because we don’t have enough chips,” Raimando wrote in her blogpost. “Automakers produced nearly 8 million fewer cars last year than expected, which some analysts believe resulted in more than $210 billion in lost revenue.”

Taiwan accounts for a whopping 63 percent of all computer chip production in the world…

The majority of chip factories are currently based in Asia, which houses about 87% of the market share of semiconductor factories (with Taiwan alone accounting for some 63%), separate industry data indicates. The political climate in the region, and tensions between Taiwan and China, has come under renewed scrutiny as the shortage has exposed how much U.S. industry relies on these sources.

chips used to produce automobiles and medical devices are particularly in short supply.

In a blog post, Commerce Secretary Gina Raimando explained that a lack of chips resulted in “$210 billion in lost revenue” for automakers in 2021…

“In 2021, auto prices drove one-third of all inflation, primarily because we don’t have enough chips,” Raimando wrote in her blogpost. “Automakers produced nearly 8 million fewer cars last year than expected, which some analysts believe resulted in more than $210 billion in lost revenue.”

If there is additional disruption to chip production this year, 2022 could easily be even worse.