A recent survey, conducted by the United States Department of Commerce, raises the “alarming” situation in which the country is located, about the shortage of semiconductors. This crisis is fueling inflation and could lead to further plant closures in the next weeks.
The shortage is fueling inflation in the United States
The report shows that the supply of semiconductors is still as complicated for American companies. The increased demand for these components that power cars, electronics and power grids has created inflation in the United States. According to Gina M. Raimondo, Secretary of Commerce, “the results of this survey show the crucial need to support national production of semiconductors”.
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Commerce Secretary calls on Congress to quickly pass legislation to strengthen U.S. competitiveness against China to accelerate US production. She specifies that “the situation in which our country finds itself is truly alarming and it is urgent to act to increase our national capacity”. Chipmakers around the world are approaching their maximum production capacity, but that is no longer enough.
Semiconductor demand increased by 17% in 2 years
Between 2019 and 2021, demand for semiconductors increased by 17%. The fact is that there has not been a commensurate increase in supply. According to data collected by the Department of Commerce, factories cannot offer immediate opportunities to increase their production capacity. The worst is that the need for chips is expected to increase further in the coming years, as new technologies become more widespread.
For two years, the shortage of chips has forced some factories that depend on these components, such as those of car manufacturers, to slow down or suspend production (this was the case for Toyota this summer, for example). 7.7 million vehicles could not be manufactured in 2021 because of this crisis. The Department of Commerce states that it hurt US economic growth and “led to higher car prices, a major factor in runaway inflation in the United States”.
The price of a used car has increased by 37% last year, which helped push inflation to its highest level in 40 years in the country. In an attempt to cope, a bill known as the « Innovation and Competition Act », plans to inject $250 billion in research and development scientists in order to strengthen the competitiveness of the United States vis-à-vis China. This law should also make it possible to support semiconductor manufacturers by granting them 52 billion dollars in emergency subsidies.
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