Supply chain issues are not unfamiliar – especially when it comes to semiconductor chips, a memory technology used in almost every “smart” device. Recent chip demand has skyrocketed, prompting reactions from multiple industries and an executive order from President Joe Biden.
The shortage stems from the pandemic’s first few weeks, when auto plants worldwide shut down amid stay-at-home orders. Between last February and April, car sales fell by almost half, resulting in auto companies and part suppliers cutting semiconductor purchases and global production drastically.
In addition to lower output, U.S. global semiconductor fabrication share is only 12 percent, down from 37 percent in 1990, according to the Semiconductor Industry Association. That left companies competing with each other to access fewer chips imported from overseas, particularly China.
A year later, President Biden issued an executive order Feb. 24 calling for a supply chain review, spotlighting the “decades-long decline” in U.S. semiconductor manufacturing capacity.
“These chips are a wonder of innovation and design that powers so much of our country, enables so much of our modern lives to go on — not just our cars, but our smartphones, televisions, radios, medical diagnostic equipment and so much more,” President Biden said.
“We need to make sure these supply chains are secure and reliable,” President Biden said. “I am directing senior officials in my administration to work with industrial leaders to identify solutions to this semiconductor shortfall and work very hard with the House and Senate.”
RV industry members said the shortage is not a new hurdle to overcome. At Silver Leaf Electronics, founder Martin Perlot said he witnessed a chip shortage three times in the last 20 years, with similar impacts during and after the Great Recession.
“We have seen this before. It is a fundamental problem in the chip industry,” Perlot said. “[Chip] factories have enormously expensive equipment and factories, and cannot respond to changes and demand.”
Circumstances such as increased remote work have caused a spike in electronics use. Perlot said that, much like the pandemic’s effect on toilet paper sales, manufacturers cannot just “start up a factory overnight.”
“The buying mentality kicks in, everyone starts stocking up and suddenly there is a shortage,” Perlot said. “When really, it is not a fundamental shortage.”
Intellitec, which makes RV electrical control and monitoring systems, said it heard rumors about a future chip shortage on the way last year – and decided to act early.
“We were placing some orders earlier than we normally would have,” Intellitec President Ned Schiff said. “We use the same chip as the auto industry, so we get to leverage high-volume microchips that automotive use. But Toyota, GM and Ford were a lot bigger then Intellitec. They bought up everything that [auto suppliers] were going to be making. Fortunately, having orders in the pipeline went into the secondary market.”
Schiff noted the company is “scrambling” as far as materials go, but Intellitec’s current customers have not run into issues.
“We are doing a good job at servicing existing customers,” Schiff said. “It is taking some scrambling and smarts, and paying a little extra for parts on the secondary market through distributors. But I would rather by paying a little more than turning down customers.”
Power and electronics manufacturer BMPRO, which is based in Australia, is not seeing any known or foreseeable changes with the shortage, company CEO Louise Bayliss said.
“Our parent company operates across multiple industries and through a combination of best practices in R&D design and supply chain at early stages of projects,” Bayliss said. “We tend to utilize electronic components which are in high utilization worldwide across a range of industries.”
Bayliss noted the company’s reach across wider markets and geographical regions generally creates high accessibility for components such as the semi chip.
“We also see that chip manufacturers then tend to mitigate their risks and create plants across multiple regions,” she said. “Combine this with long lead time forecasting and buffer stocks held with our vendors, we are not experiencing any chip shortage issues.”
Schiff noted Intellitec is seeing power relay lead times at 18 to 20 weeks, far more than the typical three or four weeks, he said. However, he expects normalcy to return around this fall.
“Because we reacted in December and January, we got ourselves covered through the fall, anyways,” Schiff said.
“Our industry is facing all sorts of material shortages, like frame shortages for chassis and wall shortages,” he said. “At least we know with six-week lead times that we can order through fall and remain through that as [demand] starts to come down.”
Schiff said he recommends suppliers are “smart” in addressing the issue.
“There is no problem with manufacturers asking us what we have down to ensure continuity and supplies,” he said. “Everything we have seen has been one heck of a year for RVs, and suppliers need to meet our supplier customer demands.”
President Biden said he and Vice President Kamala Harris met with a bipartisan group of senators and House members to address the chip shortage’s impact on economic and national security, which Biden said is “the resilience and reliability of our critical supply chains.”
“In the meantime, we are reaching out to our allies, semiconductor companies and others in the supply chain to ramp up production to help us resolve the bottlenecks we face now,” President Biden said. “We need to stop playing catch up after the supply-chain crisis hit. We need to prevent the supply chain crisis from hitting in the first place.”
President Biden’s executive order includes:
- The Assistant to the President for National Security Affairs (APNSA) and the Assistant to the President for Economic Policy (APEP) coordinating the executive branch actions.
- The APNSA and APEP, along with appropriate agency coordination, completing a review of supply chain risks within 100 days of the order.
- The Secretary of Commerce, in consultation with appropriate agencies’ heads, submitting a report identifying risks in the semiconductor manufacturing and advanced packaging supply chains and policy recommendations to address these risks.