February 6, 2023

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Chip manufacturers struggling to meet demand amid shortage

As a global chip shortage continues to put a strain on demand, experts are urging the government to help American manufacturers make more chips.

The demand for chips jumped during the pandemic, and production disruptions and supply chain issues have made it difficult for suppliers to keep up. A recent report from the Department of Commerce found that chip demand in 2021 was as high as 17% more than in 2019.

CBS News correspondent Meg Oliver visited a microchip production plant in upstate New York that’s trying to ramp up production. GlobalFoundries, which is about 20 miles north of Albany, produces about one million chips a day, but the demand is so great that the company says it needs to put out at least 10 times more than that.

“It is extremely complex, and as the demand on capability increases, so does the complexity,” said Christopher Belfi, the company’s equipment engineering manager, as he described the delicate production process.

Chips are needed for just about all devices, including laptops, home appliances like refrigerators, gaming consoles and medical equipment. The U.S. produces just around 12% of the world’s supply and it has relied heavily on chips produced in Asia. But when the pandemic hit, it shut down major production plants, decreasing supply.

“We don’t want to rely on foreign entities to be able to give us the brains and the guts of what drives our everyday vehicles, devices, our cellphones,” Belfi said.

There is renewed focus on producing more chips at home, as some experts warn not doing so could also be a national security risk. The House of Representatives is currently considering the Chips for America Act, which would provide U.S. manufacturers with $52 billion in funding to help boost domestic production.

“Well, I think it starts first and foremost with security,” GlobalFoundries CEO Tom Caulfield said. “The second is, just think about the economic activity a manufacturing facility brings to the U.S. We employ over 3,000 employees at this site.”

Experts estimate the chip shortage cost the U.S. economy around $240 billion last year. And it could be years until the shortage is over.

“I’d like to be more optimistic and tell you that right around the corner, help’s on its way,” Caulfield said. “Just the complexity of technology that it takes years to put capacity on. And I think for the better part of the next five to 10 years, we’ll be chasing supply in this industry, not demand.”

Caulfield says they’ll continue to try to meet demand, but they need private investments and federal funding through the chips bill. Both the House and Senate have passed their own versions of the Chip for America Act, and while there seems to be bipartisan support there is no agreement yet — and so, no funding.

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