Biden Administration Says It Will Address Global Chip Shortage

Biden Administration Says It Will Address Global Chip Shortage
Photo: David Becker, Getty Images
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The Biden administration plans to take steps to address the global chip shortage affecting automakers, laptop makers, and other manufacturers that rely on the semiconductor industry, White House Press Secretary Jen Psaki said.

According to Bloomberg, Psaki told White House reporters that the administration will identify “choke points” in the current supply chain and figure out a way to relieve bottlenecks in the system that have been present for years — bottlenecks that have been exacerbated by the current pandemic. The administration is “actively working alongside key stakeholders in [the] industry and with our trading partners to do more now,” Psaki said.

President Biden will sign an executive order in the coming weeks prompting a government-wide supply chain review for critical goods including, but not limited to, the semiconductors that power consumer electronics. The review will help the Biden administration identify what are the appropriate and immediate actions to take, which includes “improving the physical production of those items in the U.S.,” Psaki added.

The 100-day review, led by the National Economic Council and National Security Council, will focus on the critical minerals and semiconductor manufacturing crucial to the automotive, computer, and medical supply industries, two people familiar with the draft told Bloomberg.

CEOs of several companies, including Intel, Qualcomm, AMD, and other members of the Semiconductor Industry Association, wrote to the new president today stressing the importance of increasing domestic chip production.

“Semiconductors…enable the technologies needed to realise your Build Back Better goals, including smarter and safer transportation, greater broadband access, cleaner energy, and a more efficient energy grid, while also providing high-paying jobs for Americans and strengthening our advanced manufacturing base,” the letter said. “We therefore urge you to include in your recovery and infrastructure plan substantial funding for incentives for semiconductor manufacturing, in the form of grants and/or tax credits, and for basic and applied semiconductor research.”

Currently, companies like Intel, Qualcomm, and AMD rely on Taiwanese chip foundry TSMC to make a significant amount of their chips. Others rely on South Korea’s Samsung Electronics Co., but a global demand for electronics during the pandemic has put large foundries like those two under strain. Between producing enough chips to meet demand and finding the raw materials, they can’t make enough components for products like computers and cars.

Former President Trump’s trade war with China also caused delays, since a lot of manufacturing is done in mainland China. The former administration’s restrictions on Semiconductor Manufacturing International (SMIC) has prevented the chipmaker from getting the more advanced equipment it needs to help meet the global demand for semiconductors.

The shortage has already hit some industries hard. CNBC reported today that the covid-19 pandemic caused a $US60 ($77) billion global chip shortage for the auto industry, for instance, and auto makers like General Motors and Ford Motors expect their earnings to drop this year.