When the Chips are Down: Industry Outlook and Policy Response to the Semiconductor Crisis

COVID-19 brought to light not only the United States technology industry’s reliance on offshore chip manufacturing but also how sudden fluctuations in consumer demand and inaccurate forecasting can gravely impact product production outputs. It also raised awareness for the need to grow domestic chip production capability as the growth curve for technologies continues to expand.

This paper explains how a confluence of issues, triggered by the health crisis, led to the current chip shortage and the innovations spurring a need to build chip production capacity, particularly in the United States. The analysis also outlines U.S. policy considerations, given the current scenario, by exploring semiconductor production lead times and factory build costs.

Published: April 2021