AdvaMed Submits Recommendations to Department of Commerce to Address Semiconductor Chip Shortage and Supply Chain Issues
WASHINGTON, D.C. – Today, the Advanced Medical Technology Association (AdvaMed) submitted a response to the Department of Commerce’s request for comments on the risks in the semiconductor supply chain. In the letter, AdvaMed, which represents more than 400 medical device companies, presented recommendations for the Administration to prioritize patient care in addressing the ongoing semiconductor chip shortage and other supply chain challenges.
From the letter: “Even as the MedTech industry has proven nimble and adaptive, avoiding disruptions in the delivery of patient care, the ongoing shortages which are predicted to go on well into next year present an unsustainable situation for our industry. MedTech is only a sliver of the overall chips market, but it is undeniably a critical sector that supports our national security. While the expansion of the domestic industrial base for chips is a welcome initiative that AdvaMed fully supports for long term supply chain resilience, it is critical that policy makers and chips supply chain partners work together to ensure that delivery of healthcare in America is not disrupted in the near term. Accordingly, we look forward to working with the Department of Commerce, the interagency and key private sector partners to raise awareness about the unique and critical needs of our sector and explore ways that chips for medical uses are prioritized over non-essential uses.”
AdvaMed’s Supply Chain Task Force members have highlighted several best practices that have emerged during the pandemic amidst supply shortages, such as activating dual sources, building redundancy into their operations (i.e., qualifying alternative parts), redesigning and requalifying product configurations and expanding inventory and factory capacity. In addition, member companies have gone to extreme lengths to communicate deep into their supply chain, often reaching out to their suppliers’ suppliers about the nature and criticality of the technologies the chips are destined for.
Despite being less than 1% of the overall semiconductor chip market, manufacturers of medical devices and diagnostics rely on semiconductor chips for a vast array of technologies. These include capital equipment such as imaging systems, diagnostic systems, and robotic surgical systems, patient monitoring systems (glucose, oxygen levels, blood pressure, etc.), cardiovascular care such as EKG, pacemakers and defibrillators, respiratory care such as ventilators and CPAP, orthopedic implants and a broad spectrum of technology enabled systems and applications in the healthcare delivery system.
AdvaMed recently commissioned a study by Deloitte to better understand the use of semiconductor chips in medical devices and the impact of the chip shortages on the sector. The study found that the chips shortage is not confined to one organization or one technology, rather it’s becoming an acute, industry-wide issue for the hundreds of diagnostics, therapeutics, and capital equipment companies that produce essential medical technologies. Combining insights from a survey and interviews with members of AdvaMed, Deloitte revealed the following findings:
- Two-thirds of companies have semiconductors and firmware/embedded software in over half of their products. In addition, 50 percent of respondents report that connected devices, which also require semiconductors, comprise half of their products.
- The medical device industry’s primary needs are 2nd or 3rd generation chips, placing it in competition with automotive, industrial, and consumer industries for critical chips rather than high tech.
- All respondents have experienced some disruption to their chip supply chain. The most common disruptions are delays, order cancellations and short orders. Delays vary significantly, from two to 52+ weeks.
Read the full letter to the Department of Commerce here.
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AdvaMed member companies produce the medical devices, diagnostic products and digital health technologies that are transforming health care through earlier disease detection, less invasive procedures and more effective treatments. AdvaMed members range from the largest to the smallest medical technology innovators and companies. For more information, visit www.advamed.org.