by Jung-Ju Lee, Global Policy Associate
SIA on Nov. 8 submitted a response to the Commerce Department’s Request for Information on Semiconductor Supply Chain Risks as part of our ongoing partnership with the government to address the global semiconductor shortage.
In our submission, we expressed our industry’s concerns with the purpose and scope of the RFI and the adverse effects that government intrusion into sensitive business information and market decisions may have on the industry and economy.
At the same time, we applaud the Department’s efforts to solve supply chain vulnerabilities and have sought to provide industry-wide information on the semiconductor market and supply chain. To help better inform the Department’s analysis of the current supply-demand imbalance, we provided in our submission fuller context on the environment in which the industry has been operating and how chipmakers have responded to the extraordinary demands on the industry over the past year.
Covid-19 was an extraordinary event that led to precipitous and fundamental changes in market demand. While the semiconductor industry has pushed production capacity to historically unprecedented levels in 2021 to power the nation’s critical industries, infrastructure, and workforce throughout the pandemic, supply chain disruptions and dramatic market volatility have placed tremendous strain on the industry’s capacity to fulfill surging global demand from accelerating digitalization in the pandemic era.
The industry today operates in a difficult environment with competing and growing demand from multiple critical sectors of the economy. With demand for chips increasing across the board, capacity will have to expand everywhere, including in the U.S. to meet the needs of the present and the future.
We make the case there is no short-term solution that can immediately ease the current shortages, and top-down government-directed efforts to allocate limited supply would likely result in significant unintended consequences. Overcoming the global chip shortage requires a long-term, comprehensive solution aimed at strengthening the entire global semiconductor ecosystem and securing continued U.S. leadership in technological innovation and capacity. This involves proactive government-led initiatives such as funding for the CHIPS Act and enacting an expanded FABS Act, demand incentives for leading edge technology, and trade policies aimed at expanding global markets for U.S. products. Transformations in supply chain management strategies by end markets and consumers will also play an important role in shoring up long-term capacity and supply chain resiliency.
SIA looks forward to continued partnership with the U.S. government, foreign allies, and companies across the supply chain to build our critical technology supply chains into a more secure and robust network for the nation and global economy.
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