Jan 25, 2022 - Economy & Business

Commerce: U.S. companies have less than 5-day supply of key chips

Illustration of an infinite, recursive tunnel of semiconductor chips.
Illustration: Shoshana Gordon/Axios

U.S. companies using key chips are down to a five-day supply, according to a Commerce Department report out Tuesday stressing the fragility of the semiconductor supply chain.

Why it matters: The global chip shortage has stymied production of electronics, vehicles and other items.

Driving the news: The new findings were supplied by 150 companies, including semiconductor producers and major automakers, in response to a request for information from Commerce on the semiconductor shortage.

  • The report finds that median demand for chips was 17% higher in 2021 than 2019, but buyers aren't seeing a commensurate increase in supply.
  • The median inventory of semiconductor products dropped from 40 days in 2019 to less than five days in 2021.

What they're saying: "That, to me, is the data point which tells you how fragile this supply chain is," Commerce Secretary Gina Raimondo said during a press call announcing the findings. "Five days of inventory — no room for error."

What's next: Raimondo has been urging Congress to pass a bill that would include $52 billion in funding for domestic semiconductor manufacturing.

  • The Senate passed the U.S. Innovation and Competition Act (USICA) in June, but momentum stalled in the House.
  • House Speaker Nancy Pelosi said last week the chamber will soon introduce its version of the competition bill.
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