US Commerce Dept. Warns of Alarming Shortage of Chips

Daniel Attoe
Daniel Attoe

Updated · Feb 21, 2022

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Manufacturers of semiconductors are facing an “alarming” shortage of semiconductors, according to a government survey.

A Severe Shortage of Chips

There is an ongoing chip drought, says to a report released by the Commerce Department. 

The report, released on Tuesday, was the result of a survey of more than 150 companies that produce and buy semiconductors. It shows that some manufacturers had median inventories down to 5 days in 2019. This is in stark contrast to a 40-day median stock in 2019.

According to the findings, the ongoing shortage is down to a “perfect storm” of factors. The contributors include a higher level of demand for chips as more companies shift to semiconductor-intensive products. The COVID-19 pandemic, energy shortages, and weather conditions are also fingered by the report for dwindling chip supplies.

Chips are essential components for a wide variety of products. They enable functionality for 5G connectivity, the Internet of Things, smartphones, and so much more.

The Commerce Department’s report corresponds with earlier fears that the shortage has no immediate end in sight. In December, Gina Raimondo, US Commerce Secretary warned that it would persist for a while.

“Hopefully by this time next year or maybe a little before, the short-term crunch will be better,” she told CNN in an interview. “The long-term issue will take years to sort out. We just don’t make enough chips in America.”

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Daniel Attoe

Daniel Attoe

Daniel is an Economics grad who fell in love with tech. His love for books and reading pushed him into picking up the pen - and keyboard. Also a data analyst, he's taking that leap into data science and machine learning. When not writing or studying, chances are that you'll catch him watching football or face-deep in an epic fantasy novel.

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