Will Companies Run Out Of Semiconductors? Commerce Dept Warns It Is Possible

The Commerce Department is sounding a grim warning that the shortage of semiconductor chips that power a range of products from smartphones to computers is approaching a breaking point.

On Tuesday, the Commerce Department released the results of a months-long industry-wide survey to determine the extent of the problem. What it found was that many U.S. companies were approaching their limits as they fell back on a reserve supply of only five days' worth of chips before they run out.

Secretary of Commerce Gina Raimondo called the entire situation “alarming,” but said the report demonstrated the urgency needed to address the problem.

The report attributed the chip shortage to what it called a “perfect storm” of factors that crippled chip manufacturing. With the start of the COVID-19 pandemic, factory shutdowns and a disruption in global trade have harmed chip supplies as it has many other essential products in high demand. A slew of natural disasters and industrial fires have also put additional strain on already scarce supplies of chips last year, according to the report.