https://www.thestreet.com/investing/less-than-five-days-supp…
The supply of chips that power and move Americans has never been tighter, according to a U.S. Commerce Department report. Is a Strategic ‘Chip’ Reserve on the way?
The median supply of chips held by manufacturers has dropped from 40 days’ worth in 2019 to less than five days’ worth last year, according to the eye-popping request for information report released Tuesday, with inventories even smaller in “key industries.”
The Commerce Department report identified certain semiconductor products for which the supply challenges are most acute, including “legacy logic chips” which are used in cars, medical devices and other products, and “analog chips” used in image sensors.
Is a Strategic ‘Chip’ Reserve on the way?
How would that work, exactly?
Oil is oil and it makes no difference if you store oil from one well or another. (yes, technically there are differences in oil, but you can refine it to whatever you want)
Whereas, chips are not all alike. Not even close. Many companies make hundreds of different chips and package and bin them into all different speed grades, etc. Many chips require specific software drivers and have different versions of drivers.
Who would decide what chips go into the reserve?
Prior to the pandemic and car chip shortage I doubt anyone would have predicted many of the low tech inexpensive chips that are hard to get would have even been on the list. They are critical because they are built into a subsystem that is built by a 3rd tier auto supplier and would take a lot of redesign work to replace with something else. But what is considered a high end desirable cloud computer server chip could actually be easily replaced with another PC chip (or 2 or 3) and work just as well, but maybe taking up more floor space or consuming more watts)
Mike
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mschmit
Whereas, chips are not all alike. Not even close.
Yep. There is NO way there could be a ‘chip’ (can we call them devices?) reserve. For the reasons you cite.
There WOULD be some usefulness, however, for possibly ingots/wafers reserve.
But even then, there are different grade of silicon, and different doping, etc.
But the ingots ARE time intensive***, and might be candidates for putting in a ‘reserve’. They are not punched out like biscuits or cookies. And, of course, after growing, they need slicing, polishing, etc.
In the current overall shortage situation, it is unlikely that there would be any ‘excess’ production would be available to go into reserve.
***Days? Weeks? A month???
https://www.waferworld.com/post/silicon-wafer-processing-pro….
Is a Strategic ‘Chip’ Reserve on the way?
No. There too many types/varieties of semi-conductors to buy and store, especially as they become obsolete very quickly (within a year or three in most cases). The only exceptions I could see would specific chips used in military gear with a long use life (think bombers, fighters, etc). Chips specific to the electronics in that equipment would be needed for years and even decades after production of the last machine produced. Thus, a strategic stockpile of those specific chips would make sense to keep available. The bare circuit boards should be readily produced in moderate quantity on reasonable demand.
The only exceptions I could see would specific chips used in military gear with a long use life (think bombers, fighters, etc). Chips specific to the electronics in that equipment would be needed for years and even decades after production of the last machine produced. Thus, a strategic stockpile of those specific chips would make sense to keep available.
Actually this is already done. Some contracts call for parts to be available for some time period, say 10 years after the initial design win. The companies keep an inventory of these parts. In the case of chips that may or may not be available to be FABed in the future the company sends extra wafers through the FAB for this purpose. This is all priced into the product.
Mike
There WOULD be some usefulness, however, for possibly ingots/wafers reserve.
Even better, just store the silicon…or even the sand. Store it in plain site so everyone can see our strategic reserves…at the beach.
Mike
2 Likes
Even better, just store the silicon…or even the sand. Store it in plain site so everyone can see our strategic reserves…at the beach.
If only it was that simple.
Actually this is already done. Some contracts call for parts to be available for some time period, say 10 years after the initial design win.
I read, several years ago, that DoD was stockpiling chips for the F-35. Lockheed milked the “development” phase for nearly twenty years, so the devices it was designed to use were obsolete and going out of production before the plane was deployed.
Steve
Is a Strategic ‘Chip’ Reserve on the way?
How would that work, exactly?
Whereas, chips are not all alike. Not even close.
Beats me but that is the title of a report coming out from the US Commerce Dept. Hard to believe the the federal government might not know what it’s talking about, huh.
Actually this is already done. Some contracts call for parts to be available for some time period, say 10 years after the initial design win.
Mike
“Support beyond end of life of product” kind of standard in ‘lots’ of fed contracts.
But normally (?) at the box level. Never saw it at the internal bits and pieces of discrete components.
At the box level: Old failed unit unplugged, replacement, functionally equivalent, box plugged in.
Done and done.