President Joe Biden on Wednesday signed an executive order aimed at addressing a global shortage of chips affecting industries ranging from medical supplies to electric vehicles.
The order includes a 100-day review of key products, including semiconductors and advanced batteries used in electric vehicles, followed by a broader, long-term review of six sectors of the economy. The long-term review will allow policy recommendations to strengthen supply chains, with the aim of quickly implementing the suggestions, Biden said at a news conference Wednesday before signing the order.
The action follows calls from bipartisan members of Congress and industry leaders to warn of the possible consequences of the shortage. Known as chips, semiconductors are used to power electronics, including telephones, electric vehicles, and even some medical supplies. Senate Majority Leader Chuck Schumer, DN.Y., said “semiconductor manufacturing is a dangerous weak point in our economy and in our national security.”
Biden met Wednesday with a bipartisan group of lawmakers to discuss the shortage and said it was “very productive.” He praised the cooperative nature of the meeting and said “it’s like in the old days, people were actually on the same page.”
The semiconductor supply chain had been successful in the early days of the pandemic, as much of the world’s chips are manufactured in places like China and Taiwan. The health care crisis has highlighted problems related to U.S. dependence on overseas supply chains in many areas, and the semiconductor industry is no different. According to the Semiconductor Industry Association, a coalition backed by several chip makers, the U.S. only accounts for approximately 12.5% of semiconductor manufacturing.
The shortage has already affected several companies. Ford said earlier this month that lowering supplier estimates could mean a loss of up to 20% of production forecast for the first quarter. General Motors said earlier this month that it would extend downtime to several production plants due to the shortage and that it would “be re-evaluated in mid-March.” On Wednesday, however, before the executive order was announced, however, chief financial officer Paul Jacobson said the worst of the chip shortage could have ended.
In a letter to Biden last week, several industry associations, including SIA, the Advanced Medical Technology Association and the Motor & Equipment Manufacturers Association, wrote that the U.S. should encourage new semiconductor manufacturing plants to be established in the country to compete effectively with other nations that invested in chip production.
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