[Comprehensive] Inventory Drops to 5 Days... US Says "Semiconductor Supply Shortage Will Last at Least 6 More Months"

Gina Raimondo, U.S. Secretary of Commerce
[Photo by AP News]

[Asia Economy New York=Special Correspondent Joselgina] Amid the COVID-19 pandemic, the average inventory of semiconductor chips plummeted from 40 days to less than 5 days. If any issues arise in chip production, factories could come to a halt, potentially leading to temporary layoffs of workers. This supply shortage is feared to persist for at least six months or more.

However, there is no clear solution. Despite the Biden administration in the U.S. demanding companies to submit confidential business data, a move seen as a 'risky step,' it ultimately only acknowledged the difficulty of a short-term resolution.

◇Severe supply and demand shortage... Average inventory down from 40 days to 5 days

The U.S. Department of Commerce analyzed data submitted by over 150 semiconductor manufacturers and demand companies worldwide, including Samsung Electronics and SK Hynix, and disclosed these findings on the 25th (local time).

According to the report, the average demand for semiconductor chips last year was 17% higher than in 2019, before the COVID-19 pandemic. However, as the semiconductor shortage worsened, the average inventory dropped from 40 days in 2019 to less than 5 days. Inventory for semiconductors used in core industries was reported to be even lower. No evidence of semiconductor hoarding, which had been a concern, was found.

In particular, this supply shortage is expected not to be resolved within six months. Commerce Secretary Gina Raimondo expressed concern, stating, "The semiconductor supply chain is very fragile," and "the shortage will continue until chip production expands." The Department of Commerce's assessment is that if overseas semiconductor production facilities close even for a few weeks due to COVID-19 spread or natural disasters, domestic manufacturing facilities in the U.S. may be unable to operate, potentially forcing temporary layoffs of workers.

The semiconductor supply bottleneck inevitably disrupts the entire industry. Currently, the operating rate of most semiconductor production facilities is confirmed to be 90%. Without new construction, there is a significant limit to expanding supply. Bloomberg News, citing industry experts, reported, "The shortage of certain semiconductor items will continue until next year, and the current semiconductor chip demand boom may last until 2025."

◇"No short-term measures" acknowledged by the administration

Despite extensive investigations, there were no sharp alternatives. The conclusion released by the U.S. Department of Commerce on this day was limited to investigating some abnormally high-priced semiconductor chips, communicating with the industry, and urging the passage of legislation to support the semiconductor industry.

The Department of Commerce stated, "We will strengthen cooperation with the industry and operate an early warning system to prevent supply-demand mismatches," and "We are investigating concerns about high prices of semiconductor chips sold through intermediaries." They also plan to continue contacting companies that did not respond to the investigation or did not submit comprehensive data to grasp the actual situation.

Although a bold move was made to demand sensitive corporate secrets from private companies, it ultimately only reaffirmed the difficulty of recovery in the short term. Bloomberg News criticized, "It is as if the administration admitted it has no power to resolve the bottleneck."

Recent major announcements by the Biden administration, such as Intel's $20 billion semiconductor investment plan and cooperation agreements between Ford, GM, and semiconductor manufacturers, will take considerable time to materialize. Industry figures, including Intel CEO Pat Gelsinger, have forecasted semiconductor shortages for the next 2 to 3 years in this context.

There are also concerns that there will be differences between the items to be invested in the future and those facing supply shortages. The Department of Commerce specifically mentioned sectors with severe supply-demand mismatches, including chips used in medical devices and automobiles, analog chips used in power management, image sensors, and radio frequency. However, experts pointed out that it is unlikely that newly constructed factories will produce microcontrollers (MCUs) or analog chips rather than advanced semiconductors.

On this day, Secretary Raimondo repeatedly urged Congress to quickly pass the bill prepared by President Biden to support the semiconductor industry with $52 billion in funding.

This content was produced with the assistance of AI translation services.