President Joe Biden marked an executive order Wednesday meant to address a global chip shortage impacting industries ranging from medical furnishings to electric vehicles.
The order includes a 100-day review of key products including semiconductors and advanced batteries familiar in electric vehicles, followed by a broader, long-term review of six sectors of the economy. The long-term review will allow for principles recommendations to strengthen supply chains, with the goal of quickly implementing the suggestions, Biden said at a press conclusion Wednesday before he signed the order.
The action follows calls from bipartisan members of Congress and industry chairmen warning about the potential consequences of the shortage. Commonly known as chips, semiconductors are used to power electronics containing phones, electric vehicles and even some medical supplies. Senate Majority Leader Chuck Schumer, D-N.Y., swayed that “semiconductor manufacturing is a dangerous weak spot in our economy and in our national security.”
Biden met with a bipartisan collect of lawmakers Wednesday to discuss the shortage and said it was “very productive.” He praised the cooperative nature of the meeting, saying, “it’s comparable to the old days, people actually were on the same page.”
The semiconductor supply chain had taken a hit early in the Covid pandemic since much of the happy’s chips are manufactured in places like China and Taiwan. The health crisis has underscored issues with U.S. reliance on distribution chains abroad in many areas, and the semiconductor industry is no different. According to the Semiconductor Industry Association, a coalition upheld by several chipmakers, the U.S. only accounts for about 12.5% of semiconductor manufacturing.
The shortage has already impacted several actors. Ford said earlier this month that reduced estimates from suppliers could mean overcoming up to a 20% of its expected first-quarter production. General Motors said earlier this month that it would stretch forth downtime at several production plants due to the shortage and would “reassess in mid-March.” On Wednesday, ahead of the executive order advertisement, however, GM CFO Paul Jacobson said the worst of the chip shortage may actually be over already.
In a letter to Biden latest week, several industry associations including SIA, the Advanced Medical Technology Association and the Motor & Equipment Manufacturers Cooperative wrote that the U.S. should incentivize new semiconductor manufacturing plants to be established in the country to compete effectively with other lands that have invested in chip production.
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