Shortage of semiconductor chips almost sacked some U.S. producers last year, report says


President Joe Biden holds a semiconductor chip during a briefing at the White House in Washington, D.C., on February 24, 2021. Biden has met with industry executives and taken action over the past year to ease the shortage of semiconductor chips. File Photo by Doug Mills/UPI 

Jan. 25 (UPI) -- The semiconductor chip shortage left U.S. manufacturers and local buyers with less than five days worth of supplies at times last year, the Commerce Department said Tuesday, urging Congress to take action to bring some relief to the tech sector.

The department's report said that the chip shortage, a direct result of the COVID-19 pandemic, has seriously affected overseas manufacturing hubs and left U.S. industries vulnerable.

The information included in Tuesday's report came from an assessment that highlights results from a request for semiconductor information.

"The median inventory for consumers ... has fallen from 40 days in 2019 to less than five days in 2021," the report states.

"These inventories are even smaller in key industries. 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."

Commerce Secretary Gina Raimondo said the semiconductor supply chain remains fragile and called on Congress to pass a proposal for $52 billion in funding for the chips.

"While we don't expect long-term supply chain disruptions because of Omicron, any disruption has ripple effects," Raimondo said in a statement. "In 2021, auto prices drove one-third of all inflation, primarily because we don't have enough chips.

"Automakers produced nearly eight million fewer cars last year than expected, which some analysts believe resulted in more than $210 billion in lost revenue. It is both an economic and national security imperative to solve this crisis."

Raimondo noted that the report, which included data from 150 companies, found that demand for semiconductor chips has risen 20% from 2019 as bottlenecks narrowed access to them.

The commerce chief added that domestic chip production -- like the new Intel plant planned for Ohio -- will help the United States avoid supply chain shortages that have become commonplace in the COVID-19 era.