Commerce Secretary Calls $52 Billion for US Chips 'Extremely Urgent'

A Department of Commerce report on supply chain issues regarding American semiconductors has found ''a major supply and demand mismatch,'' and Commerce Secretary Gina Raimondo has called for ''extremely urgent'' legislation to address the crisis.

''This is why domestic semiconductor funding is extremely urgent,'' Raimondo wrote in a statement following the Biden administration report. ''The House of Representatives is preparing to introduce its version of the U.S. Innovation and Competition Act (USICA), which includes $52 billion in domestic semiconductor funding to help us create long-term solutions. The Senate has already passed its version of the bill with strong bipartisan support.

''I have been engaged daily with members on both sides of the aisle to get this done.

''Every day we wait is a day we fall further behind. But if we pass this bill and address this problem, we can create good jobs, rebuild American manufacturing, and strengthen our supply chains here at home for decades to come.''

The report, conducted on a request for information, issued the following primary findings:

• ''Median demand for chips highlighted by buyers was as much as 17% higher in 2021 than 2019, and buyers aren't seeing commensurate increases in the supply they receive. This is a major supply and demand mismatch.
• ''The median inventory of semiconductor products highlighted by buyers has fallen from 40 days in 2019 to less than 5 days in 2021 (see Figure 2). These inventories are even smaller in key industries.
• ''The RFI allowed us to pinpoint specific nodes where the supply and demand mismatch is most acute, and we will target our efforts moving forward on collaborating with industry to resolve bottlenecks in these nodes.
• ''The primary bottleneck across the board appears to be wafer production capacity, which requires a longer-term solution.''

''America needs to produce more semiconductors,'' the report concluded. ''Congress must pass funding for domestic semiconductor production, such as the U.S. Innovation and Competition Act, to solve our supply challenges for the long term.''

Raimondo added that the supply chain problems with chips in the U.S. extend beyond omicron and COVID-19, although it has exacerbated it, saying that ''any disruption has ripple effects.''

Also, she concluded, the shortage of chips has caused inflation on automobile manufacturing and prices, leading to 8 million less cars made in 2021 and amounting to a $210 billion loss of revenue.

''It is both an economic and national security imperative to solve this crisis,'' she said.

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