Biden, Schumer push relief for chip shortage

The chip shortage has the attention of President Biden and now the Congress, with Senate Majority Leader Schumer calling the shortage a "dangerous weak spot." (WH.gov)

President Biden will sign an executive order Wednesday focused on relief for the chip supply chain even as Congress preps new legislation to improve long-term domestic manufacturing. 

Calling the persistent chip shortage “a dangerous weak spot” in the U.S. economy and national security, U.S. Senate Majority Leader Chuck Schumer called Tuesday for emergency funding to bolster U.S. chip output.

Schumer, D-New York, claimed there is bi-partisan support in Congress to bolster the domestic chipmaking industry, both short and long term. “We will make serious investments in strengthening the U.S. semiconductor industry to outcompete China and stop depending on foreign sources,” he said.

President Biden will sign an executive order regarding the chip shortage, according to administration officials.  It calls for a 100-day review of supply chains for chips used cars and other devices, as well as reviews of supply chains for large-capacity batteries in electric vehicles, pharmaceuticals and rare Earth minerals.

Six sectors of supply chains will be reviewed over the next year as well, according to the president's directive: defense, public  health, communications tech, transportation, energy and food. 

“Right now, semiconductor manufacturing is a dangerous weak spot in our economy and national security. That has to change. You’ve all seen how auto plants in America are closed because they can’t get the chips,” Schumer said in a press briefing with reporters.

He said he has directed Senate committees to draft a legislative package to “outcompete China and create new American jobs,” which will have as its centerpiece a bipartisan, bicameral bill introduced last year called the Endless Frontiers Act.  “It will take the key cutting industries and make American investment so we will outcompete China in all of them,” he said.“We will also talk about the buildout of 5G and how American can remain number one there.”

It is his intention to put the legislation on the floor of the Senate for a vote in the spring.  It will have three goals: enhance American competitiveness with China by investing in American innovation, workers and manufacturing; invest in strategic partnerships and alliances with NATO, Southeast Asia and India; and “expose, curb and end once and for all China’s predatory practices, which have hurt so many American jobs,” Schumer said.

The legislation should enable the semiconductor industry short- and long-term, he said, to “protect the semiconductor supply chain and keep us number one” in AI, 5G, quantum, storage and biomed research.

The Endless Frontiers Act, as introduced last May, called for $100 billion for discovery, creation and commercialization of critical technology. In addition to Schumer, it was introduced by U.S. Sen. Todd Young, R-Indiana, and U.S. Reps. Ro Khanna, D-California, and Mike Gallagher, R-Wisconsin.

 Among its many parts, the bill would create a Technology Directorate in the newly-named National Science and Technology Foundation that would oversee the $100 billion over five years to “reinvigorate American leadership in the discovery and application of key technologies that will define global competitiveness.”

An additional $10 billion would be authorized over five years for the Commerce Department to create 10 regional technology hubs.

Schumer’s emphasis on semiconductor production domestically comes after years of lobbying by trade groups in favor of tax incentives to support construction and expansion of fabrication facilities in the U.S., instead of relying on foreign companies.   The Semiconductor Industry Association and its board members that represent many of the largest chipmakers, along with the SEMI trade group, have urged President Biden to work with Congress to fund provisions in the CHIPS for America Act, which was appended to the defense bill last year.  

President Biden is working with industry and trading partners on the chip shortage and will undertake a comprehensive review of supply chains for critical goods, his press secretary announced recently. He is expected to sign an executive order regarding the chip shortage on Wednesday.

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

The U.S. share of the global semiconductor capacity has dropped from 37% in 1990 to 12% today, SIA said. That decline is mainly due to subsidies offered by governments to U.S. chipmaking competitors, which places the U.S. at a competitive disadvantage in building new fabs.  Federal investment in semi research has been flat as a share of GDP, contrary to steps taken by foreign governments, SIA contends.

SIA CEO John Neuffer praised Schumer’s comments on Tuesday. “The key to winning the global competition for leadership in the game-changing technologies of the future is to turbocharge U.S. innovation,” he said in a statement.