Fact of the Week: 25 Percent of US Manufacturing Industries Use Semiconductors As Direct Inputs in Production

Source: Fernando Leibovici and Jason Dunn, “Supply Chain Bottlenecks and Inflation: The Role of Semiconductors,” Federal Reserve Bank of St. Louis, December 16, 2021.

Commentary: In an article from last year calculating the effects the semiconductor shortage had on inflation, economists Fernando Leibovici and Jason Dunn found that one-quarter of manufacturing industries use semiconductors as direct inputs in production. Starting in 2021, price increased for these industries’ goods outpaced those of manufacturing industries that aren’t dependent on semiconductors for production. These findings underscore the importance of semiconductors to the economy, especially as more and more commonplace appliances are equipped with computing power, from automobiles to refrigerators.