Commerce Department Warns of Computer Chip Shortage: Some Companies Have as Few as Five Days Left

On Tuesday, the United States Department of Commerce warned that some semiconductor manufacturers are facing such a severe shortage in supplies that they have less than five days’ worth of computer chips left in their inventories.

According to CNN, the Commerce Department’s report detailing the widespread shortage was conducted by a survey of over 150 businesses that produce or otherwise use semiconductors. The report found that, whereas most companies had an average median supply of 40 days’ worth of chips in 2019, the average plummeted to just 5 days’ worth in 2021.

This means that if another major disruption were to occur that would hinder overseas production, such as another COVID-19 surge or intense weather, the United States could see more factory shutdowns and many domestic workers laid off indefinitely. Last year, General Motors went through such a shutdown and was forced to halt most of its production throughout the North American continent.

“The semiconductor supply chain remains fragile,” the Department’s report states. “Demand continues to far outstrip supply.”

Commerce Secretary Gina Raimondo said that the shortage is not likely to end until at least “deep into 2022,” and the Department’s report found that most respondents “did not see the problem going away in the next six months.”

As a result of the shortage, prices have gone up dramatically for such goods as iPhones, cars, washing machines, and other devices that rely upon this technology. These devices in particular are most dependent on “legacy logic chips” and “analog chips,” which, the Department concluded, have faced the worst of the supply chain crisis.

To address the issue, the Department vowed to “target our efforts moving forward on collaborating with industry to resolve bottlenecks” for devices relying on these types of chips in particular.

The report led to further calls for action on the matter by Congress. Jordan Crenshaw, vice president of the Technology Engagement Center at the U.S. Chamber of Commerce, said that the report “highlights the critical need for the United States to invest in expanding semiconductor capacity.”

Crenshaw further called on Congress to “get to work on fully implementing and funding the CHIPS Act,” a bill that would allocate $52 billion in subsidies for domestic semiconductor manufacturers.

About Eric Lendrum

Eric Lendrum graduated from the University of California, Santa Barbara, where he was the Secretary of the College Republicans and the founding chairman of the school’s Young Americans for Freedom chapter. He has interned for Young America’s Foundation, the Heritage Foundation, and the White House, and has worked for numerous campaigns including the 2018 re-election of Congressman Devin Nunes (CA-22). He is currently a co-host of The Right Take podcast.

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