US companies have few days supply of semiconductors: US govt
Semiconductor shortage will severely affect major US manufacturers of cars and medical equipment, contributing to an even greater rise in inflation.
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President Joe Biden wants to invest $52 billion in domestic semiconductor research and manufacture
American corporations have an average of fewer than five days' worth of semiconductors on hand, putting them at risk of production shutdowns if supply is disrupted, the Commerce Department said Tuesday.
The results of a survey of more than 150 businesses conducted in September highlight the precarious situation that US businesses are in as a result of a global shortage of critical computer chips, which has already forced some businesses to cut production and contributed to an ongoing inflation spike.
President Joe Biden wants to invest $52 billion in domestic semiconductor research and manufacturing, but the US House of Representatives is yet to act, despite the Senate's approval of a measure to do so.
His Democratic Party has a slim majority in both chambers. A Democratic aide in the House confirmed to AFP that the chamber's version of the bill would be introduced this week.
"The semiconductor supply chain remains fragile, and it is essential that Congress pass chips funding as soon as possible," Commerce Secretary Gina Raimondo said in a statement.
"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," Raimondo added.
Chip demand is already 20% greater than it was in 2019, according to the survey, and companies forecast more demand than supply for the next six months.
The Commerce Department cautioned that if a COVID-19 outbreak, a natural disaster, or political instability affects a foreign semiconductor facility for even a few weeks, it has the potential to shut down a manufacturing site in the US.
According to the survey, the automotive and medical device industries are the most affected by scarcity. The rise in used car costs last year was aided by disruptions in the auto industry, which helped to push overall consumer prices up 7% in 2021.
The rise in inflation has become a political liability for Biden, and it has prompted the US Federal Reserve to hint that it was ready to raise interest rates from zero as soon as March, and possibly two more times this year in order to cool prices.
The White House has been encouraging American companies to invest in domestic semiconductor facilities, and Biden praised Intel's proposal to spend $20 billion on a new chip manufacturing plant in the United States on Friday.
However, manufacturing at the company's two plants in Ohio, which are located in the Midwest, will not begin until 2025 at the earliest.
