US: Chip shortage could lead to factory closures

The Commerce Department said the supply of computer chips in the United States has fallen to alarmingly low levels, leading to factory closures.

Companies that use semiconductors have inventories of less than five days, a sharp drop from 40 days in 2019, according to a management survey of 150 companies. Chips used in the production of cars and medical devices are particularly rare.

The department added that the demand for microprocessors rose 17% last year compared to the level of 2019.

Citing the results, the administration of President Joe Biden asked Congress to pass a bill that would provide $52 billion for domestic chip production.

“The semiconductor supply chain remains fragile and it is imperative that Congress approve funding for the chips as quickly as possible,” Commerce Secretary Gina Raimondo said in a statement.

“With the increasing demand and full use of existing manufacturing facilities, it is clear that the only long-term solution to this crisis is to rebuild our local manufacturing capabilities.”

The shortage of chips has disrupted auto production and driven up auto prices, contributing significantly to consumer prices rising 7% year-on-year last month, the highest inflation in four decades.

However, semiconductor factories take years to get up and running.

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