‘Chip shortage to persist’

A survey of semiconductor chips producers and users shows that the shortage will persist, sparked primarily by wafer production capacity, the US Commerce Department said on Tuesday.

The department said it will “engage industry on node-specific problem solving in the coming weeks. We will also look into claims about unusually high prices in these nodes”.

“Demand for chips is high. It is getting higher,” Commerce Secretary Gina Raimondo told reporters, adding that demand is now about 20% above 2019 levels. “There is not a lot of good news” in this survey, she added.

The voluntary survey of 150 companies last fall in the supply chain confirmed “there is a significant, persistent mismatch in supply and demand for chips, and respondents did not see the problem going away in the next six months”.

“The United States faces both an immediate supply shortage that is driving up prices and a long-term threat to America’s economic and national security if we do not increase domestic supply of chips,” Raimondo said.

The department said median inventory for consumers for key chips has fallen from 40 days in 2019 to less than five days in 2021.

On Friday, Chrysler-parent Stellantis said that it was halting production this week at its Windsor Assembly Plant in Ontario where it builds minivans because of the chips shortage.

House Democrats are expected as early as this week to introduce legislation aimed at increasing US competitiveness with China and spending $52 billion on semiconductor production and research, sources told Reuters, after the Senate approved funding in June.

US House Speaker Nancy Pelosi last week said the bill would come “soon” and a vote on the House floor is expected in February, the sources said.

Published in The Express Tribune, January 26^th, 2022.

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