Semiconductors are critical building blocks that connect modern society and spur innovation. They enable electronic and digital devices to process, store, and transmit data by packing billions of components into an area of only a few square millimeters. These tiny, specialized chips have an outsized impact on daily life, especially amid the global pandemic. Today, the complex and globally distributed Information and Communication Technologies (ICT) supply chain that produces them is front page news and impacting daily lives.
Semiconductors power the networks, tools, and services that have supported people’s ability to work from home, learn from home and connect with others throughout the challenges of the pandemic. When internet traffic jumped at the height of the pandemic, our broadband networks rose to the challenge thanks to a reliable supply of the components and elements that kept networks up and running day in and day out. On an average day now, more than 450 petabytes of data crosses our network – an increase of 40% year-over-year.
Consumers expect our networks and their devices – both of which rely on semiconductors – to be reliable and resilient. In turn, we rely on access to the various elements of the supply chain that help us deliver the capabilities that have made the transition to telehealth visits, digital classrooms, e-commerce, and other virtual interactions easier over the last year. Now, robust connectivity is enabling the shipping companies’ ability to monitor and distribute the COVID-19 vaccine in coordination with public safety agencies, local and state governments, and healthcare organizations.
Even as families and educators slowly return to in-person learning, it appears that remote learning may remain a post-pandemic offering – one study of school administrators found that roughly 20 percent of school systems had already started an online school, were planning to start one, or were considering starting one. We know that strong networks can help ensure access to digital education tools – regardless of where students may be physically. Just like our students and educators, businesses of all sizes have remained open and become more agile by introducing collaboration tools for employees while providing at-home workers with necessary privacy and security features.
The pandemic presented an unprecedented technical and public health challenge, the growing demand for other digital-first experiences means that the global demand for semiconductors will only continue to grow – especially as all major U.S. service providers continue to make gains in deploying more robust, higher speed technologies like fiber and 5G. In fact, in 2019 demand from mobile phone and ICT infrastructure markets alone accounted for 50 percent of total global semiconductor sales, but heightened demand, excess panic buying, and a less flexible supply of semiconductors are creating new constraints to innovation in our sector and beyond.
The pandemic has made clear that, despite U.S. leadership in semiconductor manufacturing, design, and research and development, we are not immune from challenges associated with the overconcentration of suppliers in certain regions; according to one study, about 75 percent of semiconductor manufacturing capacity, as well as many suppliers of key materials—such as silicon wafers and other specialty chemicals—are concentrated in Asia in giant foundries that manufacture chips designed elsewhere.
Material shortages and supply risks to rare earth minerals and other key components for chip manufacturing may have far-reaching consequences for continued U.S. technology leadership – including on our industry’s ability to provide essential services and the next generation of mobility to consumers and businesses.
To sustain investment and innovation necessary for a swift post-COVID economic recovery, we need secure, reliable, and robust supply chain for semiconductors and other critical components. Smart policies can help improve domestic manufacturing capacity, create strategic reserves, and introduce greater market and geographic diversity for suppliers – without favoring one industry over another. Not only will this help make the U.S. technology sector more resilient, but it can also unleash new markets around the world for U.S. exports.
Throughout the pandemic, semiconductors powered our ability to adapt and innovate in the face of tremendous hardship. We need a strong U.S. supply of chips in the future to preserve U.S. technology leadership and economic competitiveness, to keep our communities connected, and to reach individuals and households still struggling to get online.