Biden will address chip shortages and supply chain issues with executive actions

The executive order is expected to require a 100-day overhaul of supply chains for four areas: semiconductors, used in products from cars to telephones, high-capacity batteries used in electric vehicles, pharmaceuticals and rare earths that are key to technology and defense. For example, neodymium is needed for solid-state lasers that are used to designate missile targets.

The Biden order is also expected to require a one-year separate review of supply chains spanning six broader sectors, from technology to food production, a White House official said. .

The official, who works on economic issues, told reporters that the executive order would not solve the short-term chip shortage, but hope is to produce a long-term plan to help the federal government prevent future problems. supply chain.

Government officials said the government intends to encourage domestic production with incentives such as job training programs and trade loans, in addition to using the federal hiring process for more purchases made in the United States. They gave no details. The administration will also explore limiting some imports, officials said, without providing details.

Officials said the administration could use the Defense Production Act, which Biden is using for vaccine production and to secure more Covid-19 equipment, to stimulate domestic manufacturing of critical products. The government is also expected to seek public-private partnerships, although it intends to strengthen relations with allies to address common supply vulnerabilities, such as semiconductors, they said.

While executive action is not targeted at a specific country, the official said, it occurs as U.S. interest in fighting China and fostering ties with other supplier countries increases. China dominates the rare earth market and is a major player in other areas of supply, including pharmaceuticals.

A handful of suppliers from Europe, Japan and the United States dominate the global auto chip market, while China is heavily dependent on imports. The shortage of the automotive industry, one of the largest consumers of computer chips, was first noticed in China.

The current global shortage of chips is driven by the pandemic and increasing demand for used products while people work from home. The shortage has hampered car production around the world. Ford engine Co.

recently said it would reduce production of the F-150 pickup truck, one of its most profitable and popular models, due to the shortage of chips. General Motors Co.

has extended shutdowns of some American plants until March.

The White House has called on U.S. embassies to identify ways in which foreign countries and companies can help address the shortage of chips and has held meetings with car companies and suppliers to urge them to look for measures they can take. in the short term to alleviate the crisis. . Among those involved in the push are Jake Sullivan, the national security adviser, and Brian Deese, Mr Biden’s top economic adviser.

In a statement Wednesday, Ford said it appreciated Mr Biden’s efforts to resolve the crisis in the short term and review long-term ways to improve supply chains. “It is incredibly important to our workforce, our customers and our business that we are committed to ending this shortcoming as soon as possible,” the company said.

Last week, a group of associations representing technology companies, the automotive industry and other business interests sent a letter to Mr Biden calling for action to improve supply chains, including the promotion of facility construction. semiconductor manufacturing and investment in research.

“We believe the need is urgent and now is the time to act,” the letter said.

Before signing the executive order on Wednesday, Mr Biden plans to meet with a bipartisan group of lawmakers in the House and Senate to discuss supply chain issues that have become more visible during the pandemic, he said. the White House.

Biden will link the executive order to its overall plans to create jobs in the United States, especially in manufactures that have lost ground to foreign competition, such as China. The administration believes stimulating new manufacturing would create jobs in communities of color, officials said. The White House sees it as an issue that will allow Republicans and Democrats to work together to create jobs in the U.S., an administration official said.

Senate Majority Leader Chuck Schumer (D., New York) said Tuesday that work had begun on a bipartisan package to deal with competition with China, including new investments in domestic manufacturing of semiconductors.

“Right now, the manufacture of semiconductors is a dangerous weak point in our economy and in our national security. That needs to change, “Schumer said, citing the auto industry.” We can’t rely on foreign processors for chips. We can’t let China get ahead of us in production. “

Write to Alex Leary to [email protected]