The shortage of semiconductors has become so serious that the Semiconductor Industry Association — made up of leading chip groups including IBM, Qualcomm, and Intel — sent a letter to Biden on Thursday, urging him to designate funds to increase research and manufacturing of semiconductors.
“Our share of global semiconductor manufacturing has steadily declined from 37 percent in 1990 to 12 percent today,” the companies wrote. “This is largely because the governments of our global competitors offer significant incentives and subsidies to attract new semiconductor manufacturing facilities, while the U.S. does not.”
According to CNBC on Thursday, the consulting firm AlixPartners expects that the shortage will cut $60.6 billion in revenue from the global automotive industry this year.
Several automotive companies — including Volkswagen, Fiat Chrysler, and Toyota — have been forced to temporarily suspend vehicle production over the past several months due to the global chip shortage.
Last week, Ford Motor Co. announced it was significantly cutting production of its highly profitable F-150 pickup trucks due to the ongoing semiconductor chip shortage.
Semiconductors have a wide range of uses
The causes of the shortages in chips are due to a couple of factors, and of course, the coronavirus pandemic is one reason, simply because of the global lockdowns and number of companies that have been closed.
But the pandemic has also resulted in bigger consumer demand for electronics, like laptops and other electronics as the public adjusts to a more restricted lifestyle, notes The Verge.
The outsourcing of chip production to firms like Taiwan Semiconductor Manufacturing Company (TSMC), instead of making them in-house is another factor adding to the shortages, as well as the lingering impacts of Trump’s trade war with China that makes it harder for American companies to get chips from overseas.
“Semiconductors are critical to the U.S. economy, American technology leadership, and our national security. They enable the technologies needed to realize Biden’s Build Back Better goals, including smarter and safer transportation, greater broadband access, cleaner energy, and a more efficient energy grid, while also providing high-paying jobs for Americans and strengthening our advanced manufacturing base,” says the letter.
To address the semiconductor shortage in the U.S., White House press secretary Jen Psaki announced today that Biden would be signing an executive order “in the coming weeks.” She also pointed out the order involves a “comprehensive review of supply chains for critical goods.”
“The administration is currently identifying potential chokepoints in the supply chain and actively working alongside key stakeholders in the industry and with our trading partners to do more now,” Psaki told reporters. “At the same time, we are looking down the road, the long-standing issue with a short supply of semiconductors … is one of the central motivations for the executive order the president will sign.”
