According to the Biden administration, a global shortage of semiconductors will continue until at least the second quarter of the year as microchip demand exceeds supply. Gartner reported, the worldwide semiconductor revenue increased by 25.1 percent in 2021 to $583.5 billion, surpassing the $500 billion threshold.
In a new report, the U.S. Department of Commerce found that demand for chips was as much as 17% higher in 2021 than in 2019. According to Gina Raimondo, Commerce Secretary, U.S. officials will investigate allegations of price gouging by chip manufacturers for medical and auto devices.
The semiconductor supply chain is fragile, and any disruption to overseas manufacturers such as a Covid could cause production shutdowns or furloughs in America. The report highlights the need to invest in manufacturing factories. Removing the middle man and producing chips domestically is the key to solving this rollercoaster of supply chain issues. The Biden administration plans to fix this issue with the CHIPS Act, hopefully including $52 billion in funding for domestic semiconductor production.
Recently, Intel Corporation announced a $20 billion chip-making hub on the outskirts of Columbus, Ohio, which the company expects to grow to be the world’s largest manufacturing location. It is expected that the plant will be operational by 2025. Raimondo and her team hope increased communication between consumers and chip suppliers will improve supply and demand in the meantime.