Jan 25, 2022 - Economy

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

Margaret Harding McGill

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

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