Chip shortage: How soon is relief possible?

President Biden held up a wafer in a virtual meeting with chip executives to make the point that chips and wafers are critical infrastructure that he supports in his $2 trillion infrastructure program. (Live stream)


Chip and auto executives met virtually with President Biden and administration officials on Monday to discuss the global chip shortage that has hindered the auto industry and ways to strengthen the domestic chip supply chain long term. Part of the focus was on how soon relief can be achieved.

In brief remarks at the start of the summit, President Biden claimed bipartisan support for the CHIPS for America program, which he has supported with $50 billion for domestic chip manufacturing as part of his $2.2 trillion infrastructure plan. 

Some Republicans have balked at spending on anything other than roads, bridges and related construction projects in any infrastructure legislation.  “This is infrastructure,” Biden said, holding up a wafer used in the semiconductor manufacturing process.

He said 23 U.S. Senators and 42 House members from both parties sent him a letter in support of the CHIPS Act, which passed in last year’s Defense bill.  He noted that those elected officials are concerned about China’s progress in bolstering chip research and production.

“China and the rest of the world [are] not waiting,” Biden said. “There’s no reason why America should wait…we have to step up our game.” He called on Congress to make a “once in a generation investment in America’s future” and urged chip executives in the virtual event to support the effort.

Prior to the meeting, Intel CEO Pat Gelsinger said his goal is for American companies to manufacture a third of chips in the U.S., up from about 12% today, according to an interview with CNBC.

Separately, Gelsinger told Reuters that Intel is in talks to start producing chips for carmakers to ease the shortage that has idled some of their factories. He said the goal is produce such chips within six to nine months inside Intel’s existing factories, according to the Reuters report.

Intel recently announced plans to invest $20 billion in two Arizona chip fabrication facilities over the coming years, not nearly soon enough to impact the current shortage.

On Monday prior to the chip summit, Press Secretary Jen Psaki mentioned the $50 billion for chip manufacturing in the infrastructure plan as well as $50 billion more for a new directorate in the National Science Foundation that will help focus on semiconductors and advanced computing “to help increase our competitiveness at home.”

“Our view is that… we need to work closely with industry,” Psaki said. “This impacts the entire country.”

Asked if President Biden has any immediate steps in mind to curb chip shortages for automakers and others, Psaki said the chip summit on Monday was part of a “holistic, long term, across-government approach.” She added that the summit meeting on Monday wasn’t expected to lead to an immediate decision or announcement, but agreed that the chip shortage constitutes a national security issue.

National Security Advisor Jake Sullivan and NEC Director Brian Deese attended the summit.  Meeting participants also included Semiconductor Industry Association board members Gelsinger, Tom Caulfield, CEO of GlobalFoundries and Sanjay Mehrotra, CEO of Micron Technology. Senior executives from NXP, Samsung and TSMC also attended, according to the SIA.  Executives from General Motors and Ford also attended.

“Today’s meeting marks the continuation of a strong partnership between the Biden Administration and industry to strengthen America’s semiconductor supply chain by enacting federal investments in domestic chip manufacturing and research,” SIA CEO John Neuffer said in a statement.

Part of the concern with producing auto chips is that they can take four months or longer to produce. Also, many are for older chip nodes of 28nm and machinery to work on such nodes is in short supply.  Chipmakers and fabs are now heavily focused on chips for advanced applications that are made on 10nm nodes or smaller.

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