Semiconductor Shortage Shines Light (v) On Weak Supply Chain.

• Date: 01 June 2021
• Author: Tadjdeh, Yasmin
• Published date: 01 June 2021
• Author: Tadjdeh, Yasmin

Semiconductors are the foundation of the advanced technologies that regular citizens and military officials rely on--from cell phones and laptops to fighter jets. But the global shortage amidst soaring demand during the pandemic for electronic devices is illuminating supply chain issues and vulnerabilities for the United States.

While the nation is a leader in the design of semiconductors, in recent decades the manufacturing and production of microelectronics has moved offshore and is now concentrated in places such as Taiwan and China. Officials and experts say that creates a major risk.

"It is not an exaggeration to say at the moment that we have a crisis in our supply chain," said Commerce Secretary Gina Raimondo during an April hearing before the Senate Committee on Appropriations.

Global semiconductor sales increased by 6.5 percent in 2020, according to a paper by the Semiconductor Industry Association, "Semiconductor Shortage Highlights Need to Strengthen U.S. Chip Manufacturing, Research."

The global chip shortage is affecting a number of different industries and has clobbered the vehicle market particularly hard, said Falan Yinug, director of industry statistics and economic policy at SIA.

"The shortage is largely the result of substantial swings in demand due to the pandemic and the increased use of semiconductors in advanced vehicles," he said. "The semiconductor industry is working diligently to ramp up production to meet renewed demand. ... [However], this supply-demand imbalance cannot be remedied with the 'flip of a switch.'"

Restoring market balance will take time because semiconductor manufacturing is not suited to rapid and large shifts in demand, he noted.

"Making a semiconductor is one of the most complex manufacturing processes," he said. "Lead times of up to 26 weeks are the norm in the industry to produce a finished chip."

The Defense Department is not immune from the chip shortage, said Sarah Leeper, principal director of defense systems at Draper Laboratory, a not-for-profit research and development organization based in Cambridge, Massachusetts.

"There's definitely a supply chain shortage in general with defense programs," she said. "The overall access to electronics from a Defense Department [perspective] is very challenging right now."

Industry consolidation between three major companies--Samsung, Intel and the Taiwan Semiconductor Manufacturing Co.--is raising considerable concern about both supply chain access and security given that those companies, with the exception...