The supply chain challenges that have rippled across the world since the pandemic began have affected most every industry and those who rely on their products.
But for industries that serve a variety of others, the ripple effect has had an even greater impact. This is certainly true for the semiconductor industry, which provides specialized chips for a whole host of others, like auto, communications, electronics, healthcare, and more.
Many consumers may not have realized the critical importance of these small-but-mighty wafers and the plethora of applications for which they’re needed—until they ended up in short supply.
This SupplyChainBrain video provides a glimpse of the complex dynamics involved.
September was a busy month for the semiconductor industry, with several important events taking place at the federal level—as well as the release of the Semiconductor Industry Association’s (SIA) annual State of the Industry report. Here, we’ll take a brief look at key takeaways from both.
Federal Events
A September 23rd post on the White House blog entitled, “When the Chips Are Down: Preventing and Addressing Supply Chain Disruptions,” provides an overview of recent federal efforts to address the semiconductor shortage—including a few important events detailed here.
Gathering of Industry Participants
On September 23rd, Secretary of Commerce Gina Raimondo and National Economic Council Director Brian Deese led a gathering of semiconductor industry participants to discuss progress the industry has made to address supply chain challenges and increase supply chain transparency. Two similar meetings were hosted by the Biden Administration in April and May.
According to a White House brief about the meeting:
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“Reported progress includes improved communication and trust across the supply chain and improvements in the supply chain practices of chip consumers.”
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“The Administration reaffirmed that industry needs to be in the lead in resolving the supply chain bottlenecks that are occurring due to the global chip shortage.”
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“The Department of Commerce and the State Department will now [be] working together to manage an early alert system to proactively manage potential semiconductor supply chain disruptions linked to public health developments in key trading partners.”
According to Reuters reporting, meeting participants included Detroit’s Big Three automakers, plus Apple, Daimler, BMW , GlobalFoundries, Micron, Microsoft, Samsung , TSMC , Intel, and Ampere Computing.
Request for Public Comments
One outcome of the meeting was a Notice of Request for Public Comments on Risks in the Semiconductor Supply Chain—which was published the next day in the Federal Register by the Bureau of Industry and Security (BIS), Office of Technology Evaluation, U.S. Department of Commerce.
A summary of the notice provides further background on the request: “…The ongoing shortages in the semiconductor product supply chain are having an adverse impact on a wide range of industry sectors. With the goal of accelerating information flow across the various segments of the supply chain, identifying data gaps and bottlenecks in the supply chain, and potential inconsistent demand signals, the Department is seeking responses from interested parties (including domestic and foreign semiconductor design firms, semiconductor manufacturers, materials and equipment suppliers, as well as semiconductor intermediate and end-users) to the questions set forth in this notice.”
The comment period closes November 8th.
Summit of the Quad
On September 24th, President Biden hosted Prime Minister Scott Morrison of Australia, Prime Minister Narendra Modi of India, and Prime Minister Yoshihide Suga of Japan at the White House for the Leaders’ Summit of the Quad. A number of categories of key issues were tackled, including “Critical and Emerging Technologies.”
According to a White House brief, “Quad leaders are committed to working together to foster an open, accessible, and secure technology ecosystem. Since establishing a new critical and emerging technologies working group in March, we have organized our work around four efforts: technical standards, 5G diversification and deployment, horizon-scanning, and technology supply chains.”
A host of plans were announced, including the launch of a Semiconductor Supply Chain Initiative: “Quad partners will launch a joint initiative to map capacity, identify vulnerabilities, and bolster supply-chain security for semiconductors and their vital components. This initiative will help ensure Quad partners support a diverse and competitive market that produces the secure critical technologies essential for digital economies globally.”
Trade and Technology Council Meeting
On September 29th, the Trade and Technology Council (TTC)—which was launched by President Biden, European Commission President Ursula von der Leyen, and European Council President Charles Michel at the U.S.-EU Summit in June 2021—held its inaugural meeting in Pittsburgh.
Attended by U.S. Co-Chairs, Secretary of State Antony Blinken, Secretary of Commerce Gina Raimondo, and United States Trade Representative Katherine Tai and EU Co-Chairs European Commission Executive Vice Presidents Margrethe Vestager and Valdis Dombrovskis, the Council met “to establish common principles to update the rules of the road for a 21st century economy and deliver for our people.”
According to a White House brief, the inaugural TTC gathering “included a meeting with a broad range of stakeholders and we intend to continue robust engagement with a diverse range of stakeholders, including but not limited to industry, labor organizations, think tanks, non-profit organizations, environmental constituencies, academics, and other civil society members.”
At the meeting, “the United States and European Union decided to closely coordinate on an expansive set of critical economic and technology issues over the coming months and achieve concrete outcomes by the next meeting.”
One of those issues?
Semiconductor supply chains.
According to the brief, “The United States and European Union intend to enhance cooperation on measures to advance transparency and communication in the semiconductor supply chain and identify gaps, shared vulnerabilities, and opportunities to strengthen our domestic semiconductor R&D and manufacturing ecosystems with a view to improving resilience in the semiconductor supply chain.”
State of the Industry Report
On September 27th, the SIA released its released its annual State of the Industry Report.
Out today: SIA's 2021 State of the Industry Report, examining the U.S. #semiconductor industry’s current global position, opportunities for continued growth and innovation, and challenges that must be addressed. Download here: https://t.co/1dhc3lGQKi
— SIA (@SIAAmerica) September 27, 2021
According to a press release announcing the report, it examines “the U.S. semiconductor industry’s current global position, as well as challenges to — and opportunities for — continued industry growth and innovation. This comes as Congress considers critical legislation to invest in domestic semiconductor manufacturing, design, and research, and it follows last week’s White House meeting with industry leaders to discuss the ongoing global chip shortage.”
Key findings listed in the press release include:
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“Despite the uncertainty in demand caused by the COVID-19 pandemic, the global market grew substantially in 2020, and the outlook is strong for the remainder of 2021 and beyond.”
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“For some business model subsegments, the U.S. industry lags its Asian-based competitors.”
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“Industry R&D expenditures are consistently high, reflecting the inherent link between U.S. market share leadership and continued innovation.”
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“The U.S. semiconductor industry maintains one of the highest levels of R&D as a percentage of sales of any U.S. industry.”
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“U.S. semiconductor manufacturing capacity has significantly decreased as a share of global capacity.”
To provide an in-depth look at the report, the SIA hosted a webinar on September 28th entitled, “Unprecedented Challenges, Historic Opportunities: the State of the U.S. Semiconductor Industry,” which is available through the video below.
