Biden to address global computer chip shortage in his executive order

President Joe Biden will sign an executive order on Wednesday to address a global semiconductor chip shortage that has forced U.S. automakers and other manufacturers to cut production and alarmed the White House and members of Congress, administration officials said.

The scarcity, exacerbated by the pandemic, will be the subject when Biden meets a bipartisan group of U.S. lawmakers on Wednesday to discuss the issue.

A 12-inch wafer was seen at Taiwan Semiconductor Manufacturing Co. (TSMC) in Hsinchu on June 15, 2010. REUTERS/Pichi Chuang

Administration officials said Biden’s executive order, to be signed at 4:45 p.m. EST Wednesday, will launch an immediate 100-day review of supply chains for four critical products: semiconductor chips, large-capacity batteries for electric vehicles, rare earth minerals, and pharmaceuticals.

The Executive Order

The executive order will also direct six sector reviews – modeled after the Defense Department’s process to strengthen the defense industrial base. It will focus on defense, public health, communications technology, transportation, energy, and food production.

Supply shortages have besieged the United States since the pandemic’s onset, which squeezed the availability of masks, gloves, and other personal protective equipment, hurting frontline workers.

The chip shortage, which in some cases is forcing automakers to take employees off production lines, is the latest example of supply bottlenecks hurting American workers.

“Make no mistake. We’re not simply planning to order up reports. We are planning to take actions to close gaps as we identify them,” the administration official added.

A group of U.S. chip companies earlier in February urged Biden to provide “substantial funding for incentives for semiconductor manufacturing” as part of his economic recovery and infrastructure plans. Last summer, they supported bipartisan legislation to provide “tens of billions of dollars” to help pay for chip manufacturing and research.

The chip scarcity has quickly grown into a major headache for the White House.

Ford Motor Co recently said a lack of chips could cut its production by up to 20% in the first quarter. In contrast, General Motors said it was forced to cut output at factories in the United States, Canada, and Mexico and reassess its production plans in mid-March.

According to the Semiconductor Industry Association, U.S. semiconductor firms account for 47% of global chip sales but only 12% of production because they have outsourced much of the manufacturing overseas. In 1990, the U.S. accounted for 37% of global semiconductor production.

Biden has been under pressure from Republican lawmakers to protect American supply chains from China by investing in domestic manufacturing of next-generation semiconductor chips.

“I strongly urge Biden administration to prioritize protecting emerging and critical technologies, like semiconductors, from the grasp of the CCP (Chinese Communist Party),” said U.S. Representative Michael McCaul, in a recent letter to the White House from Republicans on the House of Representatives Foreign Affairs Committee.

Under Biden’s order, the White House will diversify the United States’ supply chain dependence for specific products such as rare earth minerals from China.

It will look to develop some of that production in the United States and partner with other countries in Asia and Latin America when it cannot produce such products at home, the official said.

The review will also limit imports of certain materials and train U.S. workers to ramp up production at home.

The supply chain executive order will add to Biden’s vow in January to leverage the purchasing power of the U.S. government, the world’s biggest single buyer of goods and services, to strengthen domestic manufacturing and create markets for new technologies.

(Reporting by Nandita Bose and Steve Holland in Washington; Additional reporting by Alexandra Alper; Editing by Leslie Adler)

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