The global semiconductor shortage has impacted everything from the videogame industry to automotive manufacturing. While companies like Bosch increase investment in microchip manufacturing, the demand for products only continues to rise. As a result, the supply chain disruptions still hinder countless industries, and a recent US Department of Commerce study shows that the shortage will persist in 2022.
While demand in the U.S. ranks among the highest in the world, 80 percent of the microchips in products consumed by Americans are manufactured in Asia. That reliance on foreign-made semiconductors has driven down the available chip inventory for U.S. brands. In 2019, companies reported having a 40-day microchip supply. In late 2021, many of those same brands only had a 5-day supply on hand.
"Five days of inventory. No room for error," admitted Commerce Secretary Gina Raimondo. "That tells you how fragile this supply chain is."
Due to the shortages, the US Department of Commerce conducted a voluntary survey of 150 companies in 2021.
“There is a significant, persistent mismatch in supply and demand for chips, and respondents did not see the problem going away in the next six months,” summarized Raimondo.
As expected, the decreased semiconductor supply continues to drive up prices, with automobile prices rising by 15 percent and electronic retailing 10 percent higher. However, House Democrats and President Biden are pushing for $52B of investment in semiconductor production and research.
So far, Intel Corp has answered the call, with plans to build two new semiconductor factories in Ohio. Samsung Electronics will also invest $17B in a new facility producing advanced chips in Taylor. Of course, it will take both Intel and Samsung time to erect such expansive operations, but the consumer demand isn’t relenting any time soon.
"Demand for chips is high. It is getting higher," Raimondo concluded.
Until the supply chain returns to its pre-pandemic efficiency, that might mean higher motorcycle prices for riders.