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U.S. Commerce Department Has Bad News About the Chip Shortage

Pretty much everybody agrees by now that the chip shortage just wouldn’t go away overnight, with carmakers currently preparing for another difficult wave that’s expected to create massive disruptions in their manufacturing operations.
Carmakers often halt their production temporarily due to the lack of chips 6 photos
Photo: Ford
GM's Flint assembly plantGM's Flint assembly plantGM's Flint assembly plantGM's Flint assembly plantGM's Flint assembly plant
The U.S. Commerce Department, however, decided this is just the right time to reveal the findings of a global survey on 150 companies involved in the chip production business. And the conclusion is the one you can already anticipate: the chip crisis won’t be over anytime soon.

Most participants in the study don’t believe the chip situation can improve in the next six months, the department said, and Commerce Secretary Gina Raimondo explained the demand is simply just too high.

What’s more, chipmakers are having a hard time keeping up with orders, especially because the demand has increased approximately 20 percent as compared to 2019 levels. In other words, customers want more chips, and they want them right here and now, so it’s impossible for semiconductor manufacturers to align their production with the skyrocketing demand.

Most companies are working with 5 days of inventory, as compared to 40 days back in 2019. This means the supply chain as a whole is critical to keep the manufacturing going, but given the current demand, the production and shipping delays just can’t be avoided.

The department, however, says it’s working with the involved parties to see how the chip shortage can be addressed in a timely manner, though the consensus appears to be as simple as possible: the demand will remain at record levels, and in the next six months, it’s hard to believe anything can change.

U.S. President Joe Biden, on the other hand, is favoring a plan that would grant more funds for a project whose purpose is to support the expansion of chip production at local facilities. Several companies have already confirmed such investments, including Intel and Samsung, but it’s literally impossible to see any change in terms of chip inventory in the short term anyway.
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About the author: Bogdan Popa
Bogdan Popa profile photo

Bogdan keeps an eye on how technology is taking over the car world. His long-term goals are buying an 18-wheeler because he needs more space for his kid’s toys, and convincing Google and Apple that Android Auto and CarPlay deserve at least as much attention as their phones.
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