The U.S. government expects the chip shortage to continue

The ministry said a study of 150 companies in the chip distribution chain conducted last fall confirmed “significant, current mismatch in the supply and demand of chips”. The companies also hope that the problem will not go away in the next six months. The shortage is mainly caused by limitations in the production capacity of the scales, which eventually lead to thinner pieces of material from which the semiconductors are made.

In September, the ministry asked companies to complete questionnaires to obtain additional information on the shortage. Although the request was voluntary, Commerce Secretary Gina Raymondo warned that foreign chip companies with US operations could be forced to answer questions.

Investigation

Washington’s demand sparked criticism in Taiwan and South Korea, where companies feared handing over trade secrets. Minister Raymondo recently said he had spoken to “all top executives in the supply chain”, including Samsung of South Korea and DSMC of Taiwan. The ministry said it had shared the findings of the investigation with foreign governments.

According to Raymond, there is “little good news” in the survey. “The demand for chips is high and it is increasing,” the minister said, adding that the demand for chips is now 20 per cent higher than in 2019.

More expensive

Further investigation found no evidence of hoarding of chips. However, the ministry is investigating further into the unusually high prices of some chips used by car and medical device manufacturers.

Also, the average availability of key chips has dropped from 40 days in 2019 to five days in 2021. “Five days of inventory does not allow for error. This shows how weak this supply chain is,” Raymondo said.

President Joe Biden has urged Congress to approve more funding to boost chip production in the United States. Chip shortages cause manufacturing problems in many sectors.