With companies like Nvidia and Intel projecting 2023 as an optimistic end date, the chip shortage isn’t dying down anytime in the near future. United States Department of Commerce is supporting that forecast with results from its Request for Information (RFI).
After launching the RFI in Sept. 2021, the Department of Commerce received about 150 replies from leading semiconductor manufacturers. The RFI sought information on the supply and demand mismatch for specific semiconductor nodes and supply chain transparency among other aspects of production. Through the RFI, the Department of Commerce identified several key issues surrounding fab capacity, inventory, problem nodes, and notable bottlenecks in the supply chain.
Demand for semiconductors has drastically increased from 2019. The median demand for chips was up to 17 percent higher in 2021 over 2019, according to the report. But supply has not caught up with consumer demand, creating a problematic mismatch in supply and demand. All this despite semiconductor fabs hitting 90 percent utilization, which initially spiked Q2 2020 without the ability to settle back down due to increased demand.
The noted mismatch in supply and demand also has an effect on the in-house inventory of semiconductor producers. The Department of Commerce found that buyers’ median inventory of semiconductors dropped from 40 days in 2019 to below five days in 2021. This decline in inventory leaves these facilities vulnerable to any hiccup in the supply chain—foreign or otherwise—that could lead to furloughed domestic workers, according to the report.
The data, which is now seemingly several months old, points to several key semiconductors as having disproportionately mismatched supply and demand.
“…Bottlenecks for the RFI respondents are most concentrated in a few specific kinds of semiconductor inputs and applications, including legacy logic chips (used in medical devices, automobiles, and other products), analog chips (used in power management, image sensors, radio frequency, and other applications), and optoelectronics chips (used in sensors and switches),” the report said.
There is no immediate solution to the chip shortage, but the U.S. Department of Commerce is working toward supply chain transparency that will open clear communication between semiconductor producers and buyers so they may have a better understanding of their supply and demand, respectively. This also includes an Early Alert System designed around issues caused by the pandemic.
The RFI, conducted under the Biden Administration, concludes with support for the CHIPS Act. This act is under the larger Innovation and Competition Act (USICA) and includes $52 billion in domestic semiconductor research, design, and manufacturing funding. The CHIPS Act has already made its way through the U.S. Senate, with the House of Representatives serving as the next hurdle.
Additionally, Intel recently announced plans to invest in a $20 billion, 1,000-acre facility in Ohio as part of a play to make the U.S. the number one semiconductor manufacturer in the world. These plans piggyback on its Arizona fabs.
While Intel’s newest fab and the CHIPS Act can easily be dismissed as long-term solutions to a problem that will continue to touch nearly every individual in the short term regardless of industry, they are aggressive and signal some much-needed forward motion.