Here’s how bad the chip shortage is, according to the White House

Illustration by Alex Castro / The Verge

The chip shortage won't end anytime soon, according to the White House.

Her comments come alongside a new Department of Commerce report that cites chipmakers who did not see the problem going away in six months.

Nearly every major Semiconductor producer and from companies in multiple consuming industries responded to the report.

• The Department of Commerce says it’s clearly demand, not just supply constraints, that are bogging things down, with 17 percent higher demand for chips in 2021 vs. 2019.
• Now, the industry has just five days’ worth of inventory on shelves, down from 40 days’ worth in 2019. “This means a disruption overseas, which might shut down a semiconductor plant for 2–3 weeks, has the potential to disable a manufacturing facility and furlough workers in the United States if that facility only has 3–5 days of inventory,” the report argues.
• A few types of chips are seeing the biggest impact: “legacy logic chips (used in medical devices, automobiles, and other products), analog chips (used in power management, image sensors, radio frequency, and other applications), and optoelectronics chips (used in sensors and switches).”
• Those impacted chips aren’t necessarily on the most advanced semiconductor nodes, like the brand-name Intel, AMD, Nvidia, Qualcomm, Samsung and Apple processors you might think of that use 5, 7 and 10nm. The report suggests chips that are far less dense, from 40nm all the way up to 800nm, are the ones seeing “significant semiconductor supply and demand mismatches.”
• “The primary bottleneck across the board appears to be wafer production capacity, which requires a longer-term solution.”
• “[F]rom Q2 of 2020 through 2021, semiconductor fabs operated at over 90% utilization, which is incredibly high for a production process that requires regular maintenance and very high amounts of energy.”

What will the Biden administration do about it? The report is being used by the White House to argue that Congress needs to pass the CHIPS Act, which will free up up to $52 billion for domestic chip manufacturing. It has been stuck in the House of Representatives for many months after the Senate passed it.

It is essential that Congress pass chips funding as soon as possible, according to a statement from Raimondo.

I am not going to argue that the US shouldn't fund domestic Semiconductor manufacturing, but I will say that it has been weird.

We discussed last week that Intel was going to spend $20 billion on two new plants in Ohio and that Raimondo and others were trying to link this to Congress.

The Department of Commerce is investigating claims that brokers are charging high prices for chips, and Raimondo wrote that the White House might be able to help. It's not clear if they're referring to traditional scalpers or a middleman.