Semiconductor crisis, a 43 billion European plan emerges

Semiconductor crisis, a 43 billion European plan emerges

Semiconductor crisis

Europe has decided to tackle the semiconductor crisis, that is to say that set of problems that for a couple of years has clearly influenced the availability of certain IT products, with a plan worth 43 billion euros.

Some time ago we wrote an article about the reasons that led to the semiconductor crisis, the reason why it is almost impossible to find a PS5, an Xbox Series X or a latest generation GPU.

Well , the European Chops Act, adopted this week by the European Commission, aims to double the production of chips in Europe, taking it from 9% to 20% by 2030. In short, we are not talking about a quick solution, but a long-term one.

"You all know that the semiconductor crisis has substantially slowed our resilience," said Ursula von der Leyden, President of the European Commission. "We have seen production lines stall, for example in the automotive sector."

"While demand increased, we were unable to offer the necessary products due to a lack of chips. the European Chips Act arrives at absolutely the right time. "

As previously reported, the US is also working in this direction to solve the semiconductor problem by financing production centers in the area.

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U.S. semiconductor chip shortage crisis rising to concerning level

According to a report issued by the U.S. Department of Commerce on Tuesday, the supply of semiconductors — computer chips used in an 'increasing number of products' from cell phones and cars to critical goods such as medical devices — in the U.S. has fallen to a level the Department called an 'immediate crisis.'

Per the report, the semiconductor shortage is due to a 'perfect storm' of factors, including an underlying growth in demand for chips as more industries shifted to using more of them to the pandemic 'dramatically increasing' demand for products that require semiconductors of all types.

This could lead to factories closing down domestically, the department stated, if a COVID outbreak, natural disaster or political instability disrupts a foreign semiconductor facility for even just a few weeks. This puts American workers and their families at risk.

'The semiconductor supply chain remains fragile, and it is essential that Congress pass chips funding as soon as possible,' Secretary of Commerce Gina Raimondo said in a statement. 'With sky-rocketing demand and full utilization of existing manufacturing facilities, it’s clear the only solution to solve this crisis in the long-term is to rebuild our domestic manufacturing capabilities.

'President Biden has proposed $52 billion to revitalize our domestic semiconductor industry, and every day we wait on this funding is a day we fall further behind,' Raimondo continued. 'But if we address this problem, we can create good jobs, rebuild American manufacturing, and strengthen our supply chains here at home for years ahead.'

Supply has also been disrupted by events like factory fires, winter storms, energy shortages and COVID-19 related shutdowns. The department said the private sector is 'best positioned' to address the near-term challenge posed by the current shortage, although the Biden Administration has worked with industry leaders to improve supply chain transparency and establish long-term partnerships. 

Demand continues to far outpace supply, the department said, with findings from the report including that median demand for chips highlighted by buyers was up to 17% higher in 2021 than in 2019, with buyers not seeing an increase in received supply. That has resulted in inventory of semiconductor products falling from 40 days in 2019 to less than five days in 2021, with inventories smaller in 'key industries,' including chips for automobiles and medical devices. 

'The RFI results make it clear: America needs to produce more semiconductors,' the department wrote. 'Congress must pass funding for domestic semiconductor production, such as the U.S. Innovation and Competition Act, to solve our supply challenges for the long term.'

Shortages created a 7% year-over-year increase in consumer prices in December, the largest inflation in about 40 years.