Cramer calls on the U.S. to fund plants to address chip shortages and unemployment

CNBC’s Jim Cramer said Wednesday that the United States should fund the development of a chip-making compound in an effort to address both the country’s high unemployment rate and the scarcity of chips it affects. American companies.

More and more companies, including vehicle manufacturers such as Ford and General Motors, have recently sounded the alarm about the global supply of components, which has led them to reduce production of their own products.

Meanwhile, the US labor market with an unemployment rate of 6.3% is struggling to gain strength to emerge from the coronavirus-induced recession.

“We need more chips and we need more jobs,” Cramer told Mad Money. “Why not kill two single-stone birds? It’s time for our government to invest in building the largest and best semiconductor foundry complex … in the world.”

Cars are becoming more technological, requiring silicon chips for power steering, brake sensors, and entertainment devices. Shortage of supply has forced GM and Ford to close factories, delaying the delivery of new vehicles. GM warned that the disruption could affect its 2021 targets.

Demand for chips, which are also used in products such as televisions, game consoles and computers, has increased during the pandemic as Americans moved into remote work and learning environments. Cramer also blamed globalization, which allowed companies to outsource manufacturing to giants like Taiwan Semiconductor and Samsung Electronics in Asia.

The more cars you connect, the more semiconductors you will need.

“Believe me, you will start to hear about this shortage constantly, on a daily basis, because it is wreaking havoc on all sorts of industries and making us a much less competitive company and even hostage. Hostage a customer of the largest chip, the PRC (China). We need to move forward on that. ” Cramer said.

“Our companies can’t get enough chips because there is not enough production in the world and this lack of chips is hurting all kinds of manufacturing,” he added.

He noted that he was optimistic with Gina Raimondo, the governor of Rhode Island who was appointed by President Joe Biden to head the U.S. Department of Commerce. Cramer, Raimondo, is a former venture capitalist and gives her an ideal perspective on the business world.

He also said the low interest rate environment can be a catalyst to help fund the federal project with bonds.

“America’s best technology industry, the largest intellectual property in technology, is in the semiconductor capital equipment space,” Cramer said, noting companies like Lam Research, KLA Tenor and Applied Materials that have the machines needed to make chips.

“Meanwhile, building gigantic semiconductor foundries can make more people work than any other infrastructure project.”

Disclosure: Cramer’s charity trust has shares in Ford.