The US Commerce Department has warned Congress about the prevailing chip shortage in the country; this can leave hundreds of computer manufacturing industries vulnerable to crises.
Chips shortage will affect computer production
Gina Raimondo, the US Commerce Secretary, indicated the chips shortage would not end anytime soon, raising alarms for many computer and electronic manufacturing industries.
Semiconductor giant Intel claimed these crises are unlikely to go away until 2023; however, manufacturers like Nvidia and AMD have stated this shortage will last until the second half of 2022.
According to the Commerce Department survey conducted with the input of more than 150 companies worldwide, the chip inventory of manufacturers declined from forty days in 2019 to less than five days last year.
U.S. Commerce Dept says chips shortage to persist, will review some pricing https://t.co/aPjzWv3spY pic.twitter.com/fZVkrzWWGU
— Reuters (@Reuters) January 25, 2022
While presenting the findings of the department, Raimondo stated chip users have no room for error, due to the persisting crisis.
Stating the possible reasons for the shortage, she said a bit of turbulence anywhere in the world would have consequences in the United States as well.
Be it a COVID outbreak, political instability, natural disaster, or operational problems, even small issues away from the shores of America will impact the domestic market, due to the complex supply chain nature.
Thus, the secretary urged Congress to take immediate action and pass almost $52 billion in federal subsidies to encourage investment in the chip factories in America, stating every day without action is a day lost.
The proposal was passed by the US Senate last year, but it is currently stalled in the House, where Democrats are not passing it. Reportedly, House Democrats will introduce their own version of the bill in Congress this week, after the report of the Commerce Department.
Turbulence anywhere can impact operations in America
Even as small as two to three weeks of break in any of the manufacturing units overseas will drastically impact the US’ ability to continue manufacturing cars and other products.
Although industry experts believe congressional funding can be a winning situation in the long-run, short-term crises will still prevail, as these industries take years to build and grow.
One of the reasons for the shortage is the increasing demand for chips, amid the COVID crisis, as the world moves toward digital technologies.
More consumers have purchased computers and other electronic gadgets since the onslaught of the pandemic. Reportedly, respondents of the survey had 17 percent higher demands of chips in 2021, compared to 2019.
The senior vice president of Mitre Corp., a federally funded company that runs research centers, Charles Clancy, claimed boosting the manufacturing of chips in America will be a tough business.
This is because the profit margin in this industry is small, which discourages investors.
We aren’t even close to being out of the woods as it relates to the supply problems with semiconductors.
The semiconductor supply chain is very fragile, and it is going to remain that way until we can increase chip production.https://t.co/VyMD10AvNv
— Secretary Gina Raimondo (@SecRaimondo) January 25, 2022
In the last year alone, nearly 7.7 million cars were not manufactured, due to these crises. This resulted in reduced numbers of new cars available in markets.
All of this is driving cars’ prices higher, as Raimondo mentioned they jumped by seven percent last year.