By Spyro the Dragon @ Shutterstock.com
America’s stocks of semiconductor chips are down to only five days worth, a perilously low number that usually stands nearer to forty days supplies. Josh Zumbrun and Alex Leary report in The Wall Street Journal:
U.S. manufacturers and other companies that use semiconductors are down to less than five days of inventory for key chips, the Commerce Department said Tuesday, citing the results of a new survey.
In 2019, companies typically maintained 40 days of inventory for key chips, according to the Commerce Department report. Now for the same chips—defined as 160 products that companies identified as being the most challenging to acquire—companies are operating with fewer than five days of inventory, the report said.
Commerce Secretary Gina Raimondo said the survey results show the urgency for Congress to approve the U.S. Innovation and Competition Act, which includes $52 billion to boost domestic chip production.
“We aren’t even close to being out of the woods as it relates to the supply problems with semiconductors,” Ms. Raimondo told reporters Tuesday. “The semiconductor supply chain is very fragile, and it is going to remain that way until we can increase chip production.”
Since September, the Commerce Department has sought detailed industry data from the major companies in the semiconductor supply chain. Its report was based on a survey of companies, including material and equipment providers; semiconductor manufacturers; and automotive, industrial and healthcare companies that need chips for their products.
The thin inventories are a source of particular concern because of how a single shutdown can then ripple through the supply chain. With these wafer-thin inventories, a closure of an overseas factory earlier in a company’s supply chain, for more than a few days, can cause it to exhaust its inventories.
“This means a disruption overseas, which might shut down a semiconductor plant for 2-3 weeks, has the potential to disable a manufacturing facility and furlough workers in the United States if that facility only has 3-5 days of inventory,” the Commerce Department report said.
Read more here.
