The Chip Shortage Is Still The Problem

The Chip Shortage Is Still The Problem

Ah, the chip shortage. Our stalwart enemy over the past two years, wreaking mayhem from the shadows like an arc-long anime villain. It’s taken everything from individual options to entire vehicles off of dealer lots, and in limiting supply, it has radically increased prices through dealer markups and skyrocketing used car prices. Now, the U.S. Commerce Secretary is issuing a warning: Without a lot of help, things aren’t getting better any time soon.

A survey from the Commerce Department found chip supplies in the U.S. to be dangerously dwindling. In 2019, companies had an average of 40 days’ worth of semiconductors on hand. In 2021, that number dropped to just five. While exact numbers weren’t specified, it was implied that supply number may be even lower for industries that use less-up-to-date chips — like auto manufacturing.

Photo: Justin Sullivan, Getty Images

In her statement, Secretary of Commerce Raimondo called on the House of Representatives to pass its version of the United States Innovation and Competition Act, a stimulus bill that would put $US52 ($72) billion into the pockets of semiconductor manufacturers. The bill has already passed the Senate, and Speaker of the House Nancy Pelosi has pushed for a vote in the House. From Secretary Raimondo’s statement:

“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. President Biden has proposed $US52 ($72) 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.”

Unfortunately, like all plans that exist outside of heist movies, this one comes with a major flaw. New semiconductor production facilities, or fabs, take years to build. The current chip shortage is due in large part to Covid-related factors — a rise in demand for home electronics, shutdowns at factories, and more. With the virus much more controlled in China and Taiwan (two major semiconductor manufacturing regions) than the U.S., manufacturing capacity may return to normal before a single chip is produced stateside — no matter how much government money is spent.