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Global Chip Shortage

DOC says it’s demand, not only supply constraints, that are bogging things down, with 17% higher demand for chips in 2021 vs. 2019.

According to The Verge, the White House is saying out loud what you’ve likely already heard: the chip shortage won’t end anytime soon. “We aren’t even close to being out of the woods,” said US Commerce Secretary Gina Raimondo in a briefing with reporters today, according to Bloomberg, The Washington Post, and others.

Her comments come alongside a new Department of Commerce report that cites chipmakers who “did not see the problem going away in six months,” which also isn’t exactly news: chipmakers like Nvidia and AMD have repeatedly suggested the shortage wouldn’t ease until the second half of 2022, while Intel has said it might not end until 2023.

But the report, based on 150 responses from “nearly every major semiconductor producer and from companies in multiple consuming industries,” does dive a little deeper into where the issues lie:

The Department of Commerce says it’s clearly demand, not just supply constraints, that are bogging things down, with 17 percent higher demand for chips in 2021 vs. 2019. Now, the industry has just five days’ worth of inventory on shelves, down from 40 days’ worth in 2019. “This means a disruption overseas, which might shut down a semiconductor plant for 2–3 weeks, has the potential to disable a manufacturing facility and furlough workers in the United States if that facility only has 3–5 days of inventory,” the report argues.

A few types of chips are seeing the biggest impact: “legacy logic chips (used in medical devices, automobiles, and other products), analog chips (used in power management, image sensors, radio frequency, and other applications), and optoelectronics chips (used in sensors and switches).”

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