US warns factory closures over chip shortage
The supply of computer chips in the United States has fallen to alarmingly low levels, raising the possibility of factory closures, the Commerce Department reported Tuesday.
Companies that use semiconductors have less than five days of inventory, a sharp drop from 40 days in 2019, according to a department survey of 150 companies. Chips used in the production of cars and medical devices are especially scarce.
Chip demand, the department said, rose 17% last year from 2019.
Citing the results, the Biden administration called on Congress to pass stalled legislation that would provide $52 billion for domestic semiconductor production.
“The semiconductor supply chain remains fragile and it is essential that Congress approve chip funding as soon as possible,” Commerce Secretary Gina Raimondo said in a statement. “With skyrocketing demand and full utilization of existing manufacturing facilities, it is clear that the only long-term solution to solving this crisis is to rebuild our domestic manufacturing capabilities.”
USA: Chip shortage could cause factory closureshttps://t.co/o36WBw0Ti6
– the New Herald (@elnuevoherald) January 25, 2022
The chip shortage has disrupted car production and pushed up car prices, contributing significantly to a 7% year-over-year rise in consumer prices last month, the highest inflation in four decades. Even so, it would take years for semiconductor factories to start operating.
US Commerce Secretary Gina Raimondo spoke during the announcement on Friday, January 21, 2022, in Newark, Ohio, that Intel will invest $20 billion to build two computer chip factories on a 1,000-square-foot site. acres in Licking County, Ohio, just to the east. of Columbus.
In announcing the results of the report prepared by the United States Department of Commerce, Raimondo also referred to two recurring problems when talking about the shortage of chips: low inventory availability and possible price manipulation. Regarding the former, he indicated that the average inventory of semiconductors has fallen markedly since 2019.
Just as previously certain sectors had chips in inventory for 40 days, this number barely reaches 5 today. The US government considers that its industries are in a very fragile situation, as the outlook could get even worse if something disrupts production internationally. Let us not forget that during the last year the shortage of chips was aggravated by the outbreaks of COVID-19 in Malaysia and the drought in Taiwan, which prevented the normal operation of the factories.
Miami Daily
Author: Patricia Chung 6:25 pm