AdvaMed Urges Administration to Prioritize Health Care Industry Amidst Semiconductor Shortage
WASHINGTON, D.C. – Today, the Advanced Medical Technology Association (AdvaMed) responded to the Department of Commerce following the release of a report on a recent request for information on the semiconductor supply chain. The RFI, which prompted a response from AdvaMed and member companies, sought to better understand semiconductor supply chain issues facing different industries.
According to the report released today, medical device manufacturers and other health care companies represented 18 percent of the responses to the Commerce Department’s request for information last year. Despite being less than one percent of the overall semiconductor chip market, manufacturers of medical devices and diagnostics rely on semiconductor chips for a vast array of technologies.
“We appreciate the Department of Commerce and Administration’s focus on resolving semiconductor supply chain issues. While we commend the long-term planning being done to strengthen our domestic supply chains, this report is a useful roadmap as we work on short-term measures to alleviate bottlenecks that have impacted medical technology manufacturers throughout the pandemic,” said AdvaMed President and CEO Scott Whitaker. “Semiconductor supply chain issues are only getting worse, and that can be seen most starkly in the medical technology industry where a shortage of chips could mean patients missing out on life-saving medical treatment. As we work together to unravel semiconductor supply chain issues that some are projecting will persist into 2023, we urge the Administration to make the health care sector a priority in order to prevent any disruptions to health care for patients.”
In response to the Department of Commerce’s Request for Information last year, AdvaMed wrote: “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.
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.