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Chip shortage will not end anytime soon, says U.S. Commerce Department

It might be a while before chip shortage gets sorted
By Sanuj Bhatia January 27, 2022, 5:45 am
chip shortage Source: CNN

The chip shortage has affected everyone. Be it Apple, be it Samsung, be it Microsoft, Sony, or anyone else, everybody has been affected due to the low supply of silicon chips. Biden administration went ahead and conducted a thorough survey seeking to find out answers to what everybody has been asking for the past year — what's actually causing the shortage of chips and how long will it last? Well, they have all the answers now and the report published by the United States Commerce of Department doesn't really seem positive.

The US Commerce Department conducted a survey that questioned around 150 companies within the semiconductor supply chain. The result that they've come out is that the supply is still far too short to meet the current market demand. Even though we've been talking about the chip shortage ending in 2022, Commerce Secretary Gina Raimondo seems convinced that we are far from an end.


"There is a significant, persistent mismatch in supply and demand for chips, and respondents did not see the problem going away in the next six months," she told Reuters.

The survey was open to all the companies related to the supply chain. Some companies and the governments were allegedly hesitant in taking part in the survey. However, the Commerce Department holds power to seek out information from the companies who're unwilling to participate, but carry out operations in the United States.

chip shortage Source: NYTimes

The numbers from the survey only confirm what we're already seeing. Raimondo claims that chip requirement has risen about 20% in the past two years. To keep up with the demand, the median inventory for chips has gone down drastically: it was in 40 days in 2019 and is now less than five days in 2021. She points out that this leaves very little room for error and even the smallest of errors can cause a huge amount of delays.

The department, as quoted by Reuters, said that it will "engage industry on node-specific problem-solving in the coming weeks. We will also look into claims about unusually high prices in these nodes." "Demand for chips is high. It is getting higher," she added.

The survey didn't show any signs of hoarding, but some prices are in fact inflated as per the US Commerce Department and the administration is going to review them. According to the report, the US government is ready to spend $52 billion on semiconductor production and research. The funding for the project has already been approved and it shows how the Biden administration is ready to battle the ongoing shortages, which affect not only the smartphone and PC industry but also cars and several others.

GPU still remains to be short in supply in 2022. Sources have reported that the GPU shortage may stabilize as early as summer 2022 thanks to an improvement in the supply of ABF substrate. However, if Biden Administration's numbers are to be believed, we're not going to see any improvement anytime soon.

Source: Reuters | Via: Digital Trends


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