President Joe Biden signed an ordinance on Wednesday aimed at addressing a global chip shortage that is affecting industries that range from medical care to electric vehicles.
The contract includes a 100-day review of key products, including semiconductors and advanced batteries for electric vehicles, followed by a more comprehensive long-term review of six economic sectors. The long-term review will enable policy recommendations to strengthen supply chains with the aim of implementing the proposals quickly, Biden said at a press briefing Wednesday before signing the order.
The action follows calls from non-partisan congressmen and industry leaders warning of the possible consequences of the shortage. Semiconductors, commonly known as chips, are used to power electronics including phones, electric vehicles, and even some medical supplies. Senate Majority Leader Chuck Schumer, DN.Y., said “semiconductor manufacturing is a dangerous flaw in our economy and national security.”
Biden met with a bipartisan group of lawmakers on Wednesday to discuss the shortage and said he was “very productive”. He praised the cooperative nature of the meeting and said: “It’s like before, people were actually on the same page.”
The semiconductor supply chain took a hit at the start of the Covid pandemic, as much of the world’s chips are made in countries like China and Taiwan. The health crisis has highlighted problems with the US’s reliance on overseas supply chains in many areas, and the semiconductor industry is no different. According to the Semiconductor Industry Association, a coalition backed by several chip manufacturers, the US only accounts for about 12.5% of semiconductor manufacturing.
The shortage has already affected several companies. Ford said earlier this month that reduced estimates from suppliers could mean losing up to 20% of its expected production in the first quarter. General Motors said earlier this month it will be extending downtime at multiple manufacturing facilities due to the shortage and will “reevaluate in mid-March”. However, on Wednesday, ahead of the executive order announcement, GM CFO Paul Jacobson said that the worst of the chip shortages may already be over.
In a letter to Biden last week, several industry associations, including the SIA, the Advanced Medical Technology Association, and the Motor & Equipment Manufacturers Association, wrote that the U.S. should incentivize new semiconductor manufacturing facilities to be built in the country to effectively compete with other countries invested in chip manufacturing.
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