Biden to tackle chip shortage while U.S. semi execs and UAW urge domestic production

President Biden's team will have its plate full with a chip shortage on top on building up U.S. chip production and dealing with China on electronics trade. (Getty Images)


The global chip shortage forced some initial response by the Biden administration the same day top executives of major U.S. semiconductor makers urged the president to take “bold action” to boost domestic production.

The Biden administration is working with industry and trading partners to address the global chip shortage and will undertake a comprehensive review of supply chains for critical goods, Press Secretary Jen Psaki announced Thursday.

Also, in a letter to President Biden, 21 board members of the Semiconductor Industry Association urged him to include funds for incentives for U.S. chip manufacturing and research in the form of grants and tax credits.

Noting that the U.S. share of global chipmaking has declined from 37% in 1990 to 12% today, the letter said the U.S. has become “uncompetitive in attracting investments in new fab construction and our technology leader is at risk in the face for preeminence in the technology of the future, including AI, 5G/6G and quantum computing.”

The SIA board includes AMD CEO Lisa Su, Intel CEO Bob Swan, and Qualcomm CEO Steve Mollenkopf.

SIA CEO John Neuffer said that investing in domestic chip production incentives and research, President Biden and Congress “can reinvigorate the U.S. economy and job creation, strengthen national security and semiconductor supply chains and ensure the U.S. remains the leader in the game-changing technologies of today and tomorrow.”

Congress enabled the CHIPS for America Act in the 2021 defense bill, which authorizes federal incentives for chipmaking, but Congress needs to provide funding.

Psaki said President Biden will sign an executive order to “undertake a comprehensive review of supply chains for critical goods” in coming weeks. The review will focus on immediate actions “from improving the physical production of those items in the U.S., to working with allies to develop a coordinate response to the weaknesses and bottlenecks that are hurting American workers.”

The order will direct a 100-day review by the National Economic Council and National Security Council focused on semiconductor manufacturing and advanced packaging, critical minerals, medical supplies and high-capacity batteries used in electric vehicles and industry, according to sources that spoke to Bloomberg.

The chip shortage has taken its toll on many carmakers including General Motors, which has temporarily closed three assembly plants for at least a month.  The United Auto Workers said in a statement it is working with the Biden administration, Congress and suppliers to bolster U.S. production of parts and “ensure that advanced technology that has been offshored is brought back and produced by UAW workers here in the U.S.”

The chip shortage has heightened tensions in the U.S. relationship with China, which is investing in expanding its chip industry.  Complicating the trade issue for the Biden administration is that most U.S. semiconductor companies outsource their chip production to TSMC and Samsung Electronics of South Korea, the two largest chip fabrication companies by far in the world. 

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