US Commerce Department report highlights alarming chip inventory levels


In letter: The US Department of Commerce last year requested information from the semiconductor supply chain to get a better understanding about the ongoing chip shortage. The department received more than 150 responses and shared some of what it learned this week.

The Commerce Department found that among 25 immediate / end users of semiconductors, median inventory levels had dropped to fewer than five days by September 2021. For comparison, the figure was closer to 40 days in 2019 before the pandemic.

Of course, we’re looking at data that is now at least four months old, so make of it what you will.

Above all, the Commerce Department notes that the semiconductor supply chain remains fragile due to limited wafer production capacity. The biggest challenge continues to be trying to balance supply and demand, but companies also identified other bottlenecks relating to things like packaging capacity and assembly.

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Semiconductor makers are doing their best to address the issue, but it’s not one that can be solved overnight. Since Q2 2020, quarterly fab utilization has stayed above 90 percent; it didn’t even touch 80 percent in Q1 2019.

Companies are also throwing large amounts of money at the problem, building new fabs as quickly as possible. Intel just days ago said it would spend more than $20 billion to construct two new chip factories in Ohio. Construction will begin by the end of the year with production expected to come online in late 2025.

Image credit: Tima Miroshnichenko, Cottonbro



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