According to a report from the U.S. Department of Commerce, the semiconductor shortage responsible for putting pressure on electronics manufacturers isn't going away anytime soon. The information comes via a Request for Information survey with 164 responses from "nearly every major semiconductor producer and from companies in multiple consuming industries."
"We aren't even close to being out of the woods as it relates to the supply problems with semiconductors," Commerce Secretary Gina Raimondo told reporters, according to the Wall Street Journal. "The semiconductor supply chain is very fragile and it is going to remain that way until we can increase chip production."
The report stated that several U.S. chip manufacturers and customers that use semiconductors are down to five days worth of supply, compared to as many as 40 days in 2019. Meanwhile, it suggests that between Q2 of 2020 through 2021, fabs were working at over 90% capacity.
It also claims that the median demand for chips was 17% higher in 2021 than in 2019, but that mismatches in supply and demand on certain nodes mean that customers cannot purchase what they need.
The biggest issue in the supply chain is the production of wafers, thin slices of silicon used in chip design. However, survey respondents also highlighted material, packaging capacity, and the ability to assemble and test chips.
The Department of Commerce identified a series of "black swan" events, including COVID-19 plant shutdowns, storms, fires and energy shortages occurring as demand increased. With some companies holding just three to five days worth of inventory, the report suggests that any disruption to a plant overseas could end up stopping production and possibly furloughing workers in the United States.
Some of the data cited in the report came from the Semiconductor Industry Association, a lobbying group that includes Intel, AMD, Nvidia, Qualcomm, IBM and Texas Instruments, among others.
The Most Crucial Nodes Aren't Cutting Edge
While the PC industry has been hit hard, much of the report focuses on the automotive and medical industries, as well as older logic chips, analog chips (for instance, those used in image sensors and power management) and optoelectronics in sensors and switches. In addition, the Commerce Department noted specific nodes that are seeing a supply and demand mismatch:
- Microcontrollers that are primarily made of legacy logic chips, including, for example, at 40, 90, 150, 180, and 250 nm nodes
- Analog chips including, for example, at 40, 130, 160, 180, and 800 nm nodes; and
- Optoelectronics chips including, for example, at 65, 110, and 180 nm nodes.
These aren't the chips you see in phones, gaming PCs and laptops, which are often using cutting-edge nodes as small as 7 nm.
The Commerce Department notes that these chips are used in "critical industries," like broadband, cars and medical devices. Additionally, the department said it would look into "unusually high prices" on these nodes, suggesting price gouging.
A Push to Pass Legislation
The Department of Commerce's report is pushing for legislation to produce more chips in the United States.
"The RFI results make it clear: America needs to produce more semiconductors," the report's overview concludes, pushing for Congress to allow funding for semiconductor production in the United States. It also urges the passage of the United States Innovation and Competition Act of 2021, which provides funding through 2026 for research, development and manufacturing; provisions related to funding "wireless supply chain innovations;" imposing sanctions on China due to cybersecurity and human rights abuse; and authorizing space exploration programs.
The Senate passed a version of the bill in June, but according to the New York Times, it has yet to make a move to the House of Representatives.
Late last week, Intel proposed a plan to build a "mega site" at a new campus in Licking County, Ohio, initially investing $20 billion with the first fab going online in 2025. The site could house up to eight fabs, but the company states that "the scope and pace of Intel's expansion in Ohio, however, will depend heavily on funding from the CHIPS Act."
It is unclear which chips Intel will produce in these fabs.
While many companies in the U.S. design their own chips, they turn to contract manufacturers like Taiwan Semiconductor (TSMC), outsourcing the production of what are now rare components.
