Biden is pushing for funds to boost chipmaking amid shortages

The United States has been besieged by a lack of supplies since the outbreak of the Covid-19 pandemic. (Reuters photo)

President Joe Biden said Wednesday he will seek funding for legislation to increase chip manufacturing in the United States, as semiconductor shortages have forced US carmakers and other manufacturers to cut production.

Administration officials said Biden also signed an executive order on Wednesday aimed at addressing the global shortage of semiconductor chips that have alarmed the White House and members of Congress.

The scarcity, exacerbated by the pandemic, was also the subject of a debate between Biden and a group of bipartisan US congressmen at the White House on Wednesday.

“I am directing senior officials in my administration to work with industry leaders to identify solutions to the semiconductor shortage,” Biden said Wednesday.

“Congress has passed a bill but they need … $ 37 billion to make sure we have that capacity. I’ll pay for that too.”

His remarks were a clear indication of measures aimed at boosting chipmaking capacity that were included in this year’s National Defense Authorization Act, but which require a separate appropriation process for funding.

The chip industry pressured the Biden administration and Congress to take action to fund provisions of the bill. “We urge the president and Congress to invest ambitiously in domestic chip manufacturing and research,” the Semiconductor Industry Association (SIA) said earlier Wednesday.

Biden’s Executive Order launched a 100-day review of the supply chains of four important products: semiconductor chips, high capacity batteries for electric vehicles, rare earth metals, and pharmaceuticals.

The order also directs six sector reviews, similar to the process the Department of Defense used to bolster the defense industrial base.

It will focus on defense, public health, communications technology, transportation, energy and food production.

The United States has been besieged by a lack of supplies since the start of the pandemic, which has reduced the availability of masks, gloves and other personal protective equipment, hurting frontline workers.

The shortage of chips, which in some cases is forcing automakers to take staff off production lines, is the latest example of supply bottlenecks.

“Make no mistake, we are not simply planning to request reports. We are planning to take action to close the gaps when we identify them,” said a management official reviewing the executive order.

Democratic lawmakers attending Wednesday’s meeting were Senators Mark Warner, Tammy Baldwin, Tammy Duckworth and Maggie Hassan, as well as Rep. Doris Matsui. The Republicans consisted of Senators John Cornyn, Mike Brown, Marsha Blackburn and Rob Portman, and actors John Joyce and Michael McCall.

Production cuts

Ford Motor Co recently said a chip shortage could cut the company’s production by up to 20% in the first quarter. General Motors said it was forced to cut production at factories in the United States, Canada and Mexico and will reassess production plans in mid-March.

Ford praised Biden’s plan on Wednesday and said in a statement that “it is extremely important to our workforce, our customers and our business that we have an obligation to end this shortfall as soon as possible.”

American semiconductor companies account for 47% of global chip sales but only 12% of production because they have outsourced so much of their manufacturing abroad, according to the SIA. In 1990, the United States accounted for 37% of global semiconductor production.

Biden has come under pressure from Republican lawmakers to do more to protect U.S. supply chains from China by investing in the domestic manufacturing of next-generation semiconductor chips.

“I strongly urge the Biden administration to give priority to protecting emerging and critical technologies, such as semiconductors, from the grip of the Chinese Communist Party,” Representative McCall said in a recent letter.

Under Biden’s order, the White House will look to diversify the nation’s supply chain dependence on specific products, by developing domestic production and partnering with other countries in Asia and Latin America when it cannot produce products at home.

The review will also consider limiting imports of certain materials and training US workers.

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