Chip Shortage Means Some Companies Have Less Than 5 Days Worth of Inventory
Chip supplies are so fragile that many companies and manufacturers only have a few days worth of supply, according to the US Commerce Department.
The findings come from a study the agency launched in September to examine the impact of the ongoing chip shortage. It found that on a median-basis, semiconductor buyers are reporting less than a 5-day supply, down from a 40-day inventory back in 2019.
The situation is even worse for “key industries,” where chip supplies are more scarce. “This means a disruption overseas, which might shut down a semiconductor plant for two to three weeks, has the potential to disable a manufacturing facility and furlough workers in the United States if that facility only has three to five days of inventory,” the Commerce Department warns.
The study, released today, includes responses from more than 150 companies. Respondents are not named, but they include “nearly every major semiconductor producer,” and companies involved in a variety of industries including car manufacturing, healthcare, and electronics.
Commerce found that chip demand among buyers was 17% higher in 2021 compared to 2019. However, companies have yet to see “commensurate increases in the supply they receive.”
Most of the major chip factories have also been booked at over 90% capacity since Q2 2020, leaving little room to churn out more semiconductors.
“The main bottleneck identified is the need for additional fab capacity. In addition, companies identified material and assembly, test, and packaging capacity as bottlenecks,” the Commerce Department says.
The other notable finding is that some companies report “unusually high prices for semiconductors sold through brokers,” which the Commerce Department is investigating.
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