The US Commerce Department reported on Tuesday about the supply shortage in computer chips. According to the commerce department, the supply is so low that right now manufacturers who use semiconductors are only left with inventory that can last to a maximum of 5 days.
The departments believe this drop is disturbing and something needs to be done to solve the shortage issue. Since these are the chips that are used in medical equipment as well as automobiles, the relevance of chips multiplies more. The Commerce Secretary, Gina Raimondo, clarified that at present it’s important to pass the chip funding at the earliest. The Secretary mentioned the short supply and how it cannot be ignored.
The department also gave the data of 2019 when companies used to have at least 40 days of inventory in stock. However, when compared to 2019, the situation and demands have changed a lot. The chip demand in 2019 has now gone up by 17 percent. In the current times, the demands are sky-rocketing and with sky-rocketing demand, it’s getting hard for factories to meet the demands.
It is required to rebuild the domestic manufacturing capabilities to solve this issue. Keeping the shortage in view, the Biden administration called on Congress to pass stalled legislation. If the legislation is passed then it will provide $52 billion which can be utilized for semiconductor production in the country. The Biden administration is pushing the US capabilities in the global markets.
Companies like Intel are investing around $20 billion in chip space. It plans to build the world’s biggest chip-making complex in Ohio State. Back in November last year, Samsung, a South Korea-based tech giant, showed interest in creating a $17 billion computer chip plant in Texas. Though the plant project will take longer before it gets operational.
The chip scarcity has given rise to problems including inflated prices in the car industry. According to the department, it’s the biggest inflated price in almost 40 years. Automobile prices have climbed by 7 percent year after year. Although several reasons had composed the present circumstance, the pandemic is surely one of them. During the pandemic, the demand for devices, gadgets, and electronics went high all of a sudden. Eventually, the abrupt demand left the semiconductor makers struggling.