Semiconductors are a marvel of modern technology and the foundation of modern life. Packed with up to tens of billions of transistors on a piece of silicon the size of a quarter, semiconductors enable everything from cars to coffee makers, not to mention new, potentially game-changing applications such as artificial intelligence, quantum computing, advanced wireless networks, and more.
Over the last year, with the world still gripped by the COVID-19 pandemic, semiconductor-enabled technologies allowed us to remotely work, study, treat illness, order goods online, and stay connected. As much of the world shut down, semiconductors enabled the gears of the global economy, healthcare, and society writ large to continue spinning.
And, critically, semiconductors helped doctors and scientists develop treatments and vaccines to begin making the world healthy again. Without the semiconductors that power the world’s most advanced supercomputers, for example, the historically rapid development of COVID-19 vaccines would not have been possible.
While the semiconductor industry has achieved great successes in 2021, it also faces significant challenges. Chief among them is a widespread global semiconductor shortage. Unanticipated rising demand for semiconductors needed during the pandemic response, coupled with significant fluctuations in chip demand for other products such as cars, triggered a rippling supply-demand imbalance felt across the world. The semiconductor industry has worked diligently to increase production to address high demand, shipping more semiconductors on a monthly basis than ever before by the middle of 2021, but most industry analysts expect the shortage to linger into 2022.
The shortage increased awareness of the importance of America’s semiconductor supply chains. Although geographic specialization in the global chip supply chain has enabled tremendous growth and innovation in the industry, vulnerabilities in the supply chain have emerged in recent years. For example, in 2019, 100% of the world’s most advanced logic semiconductors (< 10 nm) were produced overseas.
The U.S. government has taken notice of the need to fortify America’s semiconductor supply chains through robust investments in U.S. chip production and innovation. In June 2021, the U.S. Senate passed the United States Innovation and Competition Act (USICA), broad competitiveness legislation that includes $52 billion to bolster domestic chip manufacturing, research, and design. The semiconductor industry has urged the U.S. House of Representatives to follow suit and send legislation to the President’s desk to be signed into law.
In 2021, semiconductors helped steady a world wobbled by COVID-19, and the industry’s future has never been brighter. As semiconductor innovation and global chip demand continue their inextricable rise, government and industry must work together to maintain America’s leadership in this foundational, indispensable technology.