Chip shortages inevitable or resilient

The supply-chain crisis was terrible in 2021, but we didn't know just how bad. It was actually a five-days-from-emergency kind of bad. A new report from the Department of Commerce released Tuesday found that the typical inventory of semiconductor chips fell from 40 days in 2019 to less than five days in 2021. Some key industries were especially strapped. That had a big impact, particularly for automakers, consumer electronics, LED lights, and even wind turbine producers. The global auto industry, for example, lost about $210 billion in revenues in 2021 thanks to the global chip shortage that forced companies to scale back production. What's more, the chip shortage also drove up inflation because both new and used cars got so expensive, as automakers need chips to make new vehicles. The price of new cars and trucks in December was up a shocking 11.8% year-over-year. Tuesday's report is based on responses from more than 150 companies that responded to a Request for Information that Commerce sent in September, asking for information about inventories, demand, and delivery dynamics from anyone involved in the semiconductor supply chain. “That means if a COVID outbreak, a natural disaster, or political instability disrupts a foreign semiconductor facility for even just a few weeks, it has the potential [to] shut down a manufacturing facility in the U.S., putting American workers and their families at risk,” Commerce said Tuesday. The data also showed that not only were companies operating with very lean inventories, but demand for chips last year was at least 20% higher than 2019. Industry experts expect the chip shortage to continue into 2022.