NCTA — The Internet & Television Association

How the Semiconductor Chip Shortage Could Delay Broadband Connectivity

How the Semiconductor Chip Shortage Could Delay Broadband Connectivity

semiconductors

Over the past year, the devastating COVID-19 pandemic has revealed the urgent necessity of robust internet connectivity. When millions of Americans were sent home during lockdowns and schools closed, broadband networks provided the lifeline that allowed people to continue working and learning from home, attend telehealth appointments, and connect with family and friends. 

As internet traffic surged, people around the world began to update their home networking equipment and associated devices to receive the full benefits of a broadband connection. But while American broadband networks were able to handle the massive data surge caused by the pandemic, the semiconductor industry hasn’t been able to keep up with demand and the global semiconductor supply chain is now facing a significant strain. Because of these supply chain issues, industries that rely on semiconductors—including broadband providers—are seeing significantly increased lead times in the delivery of chips.

Semiconductor chips are critical for high-speed broadband connectivity—they power the consumer devices and networks that enable access across America, and a severe global shortage could undermine the ability of more Americans to connect. In fact, one broadband equipment provider estimates that in 2021 alone, more than five million homes and businesses could miss out on new or upgraded devices because of semiconductor chip shortages. 

As a result of delays associated with the global chip shortage, in some cases, a broadband provider must wait a year from the time it places an order to the time a device like a Wi-Fi router hits its warehouse and can be delivered to a customer. This kind of delay could significantly slow broadband deployment to places that need it most and at a time when people need it most, leaving consumers and businesses without the connectivity that would allow them to compete and thrive.

The federal government is currently considering both short and long-term measures to address the semiconductor chip shortage, which is affecting many industries. And to ensure that every industry receives the necessary chips to continue their mission of deploying products and services to American consumers, a sector-neutral approach must be followed.

In recognition of the critical role that broadband plays in America, Congress and the FCC have worked hard to invest taxpayer dollars to get more Americans connected. The FCC completed the Rural Digital Opportunity Fund auction last year and Congress passed the Consolidated Appropriates Act and the American Recovery Plan, which together direct tens of billions of dollars towards rolling out broadband services to more Americans. But if government efforts to strengthen the semiconductor supply chain do not adopt an equitable approach across industries, these tens of billions of dollars in new broadband investment could very well be stranded. Broadband deployment requires access to sufficient equipment, which in turn requires access to sufficient chips—government preferences for other sectors could undermine its broadband deployment efforts. 

In the near term, government can avoid exacerbating the chip shortage by ensuring that immediate measures are technology- and sector-neutral. And to further prevent a similar chip shortage in the future, the U.S. needs a bigger investment in domestic research and development and manufacturing capacity for semiconductors to allow the U.S. to better compete in the global market. To accomplish this, the Biden Administration should work with Congress to fully fund the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act, which establishes appropriate incentives for domestic semiconductor innovation and investment.