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US companies have less than a five-day supply of semiconductors

The Department of Commerce has called on president Biden to move forward with the proposed $52 billion funding for the domestic chip industry

The median inventory of chips held by US companies fell to less than five days worth in 2021, as global companies struggled to deal with the semiconductor shortage.

That's according to the Department of Commerce's Semiconductor Supply Chain Request for Information (RFI), which was issued September 2021. It asked all parts of the supply chain, producers, consumers, and intermediaries, to voluntarily share information about inventories, demand, and delivery dynamics. It recorded over 150 responses from entities located across the world.

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

The Commerce department highlighted that if a COVID outbreak, natural disaster, or political instability disrupts a foreign semiconductor facility for even just a few weeks, it has the potential to shut down a manufacturing facility in the US, putting its workers and their families at risk.

The report also found that demand for semiconductors was as much as 17% higher in 2021 compared to 2019, and consumers aren’t seeing commensurate increases in the available supply. The majority of semiconductor manufacturing facilities are also operating at or above 90% utilisation, which means there’s limited additional supply without building new facilities.

Bottlenecks are most 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 optoelectronics chips, used for sensors and switches.

The main reasoning for these bottlenecks was identified as the need for additional fab capacity. Additional ones include a lack of raw material inputs for both semiconductors and the other components paired with semiconductors to assemble sub-parts for electric devices.

“The semiconductor supply chain remains fragile, and it is essential that Congress pass chips funding as soon as possible,” said secretary of Commerce Gina M. Raimondo. “With sky-rocketing demand and full utilization 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.

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"President Biden has proposed $52 billion to revitalize our domestic semiconductor industry, and every day we wait on this funding is a day we fall further behind. But if we address this problem, we can create good jobs, rebuild American manufacturing, and strengthen our supply chains here at home for years ahead.”

The US had asked chipmakers and electronics device makers to voluntarily send in information on their production capacity, inventories, and customers, to understand where bottlenecks may exist in the global supply chain.

However, in October 2021 TSMC revealed it was mulling how best to respond to the request without revealing sensitive client information. The Biden administration hinted it could reintroduce a law to force companies to share the data if they failed to comply with the request.

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