(Add potential actions to increase chip supply)
WASHINGTON, Feb 24 (Reuters) – President Joe Biden will sign an executive order on Wednesday to address a global shortage of semiconductor chips that has forced U.S. carmakers and other manufacturers to cut production and alarmed White House and members of Congress, administration officials said.
The shortage, exacerbated by the pandemic, will be the subject when Biden meets Wednesday with a bipartisan group of U.S. lawmakers to discuss the issue.
Administration officials said Biden’s executive order, which will be signed at 16:45 EST (2145 GMT) on Wednesday, will launch an immediate 100-day review of supply chains for four critical products: semiconductor chips , high capacity batteries for electric vehicles, minerals and rare earth pharmaceuticals.
The order will also lead to six sectoral reviews, modeled on the process used by the Department of Defense to strengthen the defense industrial base. It will focus on the areas of defense, public health, communications technology, transportation, energy and food production.
The United States has been plagued by supply shortages since the start of the pandemic, which squeezed the availability of masks, gloves and other personal protective equipment, hurting front-line workers.
The shortage of chips, which in some cases forces carmakers to withdraw employees from production lines, is the latest example of supply bottlenecks harming American workers.
“We are not mistaken, we do not just plan to order reports. We plan to take action to reduce the gaps as we identify them, “the administration official added.
A group of U.S. chip companies urged Biden earlier this month to provide “substantial funding for incentives for semiconductor manufacturing” as part of its economic recovery and infrastructure plans. Last summer they backed bipartisan legislation to provide “tens of billions of dollars” to help pay for chip making and research.
Chip shortages have quickly become a major headache for the White House.
Ford Motor Co. recently said the lack of chips could reduce the company’s production by up to 20% in the first quarter, while General Motors said it was forced to reduce production at factories in the United States, Canada and Mexico and would re-evaluate its production plans in mid-March.
U.S. semiconductor companies account for 47 percent of global chip sales, but only 12 percent of production, as they have outsourced much of their overseas manufacturing, according to the Semiconductor Industry Association. In 1990, the U.S. accounted for 37% of global semiconductor production.
Biden, a Democrat, has been pressured by Republican lawmakers to do more to protect China’s U.S. supply chains by investing in the national manufacture of next-generation semiconductor chips.
“I strongly urge the Biden administration to prioritize the protection of emerging and critical technologies, such as semiconductors, from the reach of the CCP (Chinese Communist Party),” US Representative Michael McCaul wrote in a recent letter to the White House of Republicans in the House of Representatives Committee on Foreign Affairs.
Under Biden’s order, the White House will try to diversify its dependence on the U.S. supply chain for specific products, such as China’s rare earth minerals.
He will look to develop some of that production in the United States and collaborate with other countries in Asia and Latin America when he is unable to produce those products at home, the official said.
The review will also study limiting imports of certain materials and train U.S. workers to increase production at home.
The supply chain executive order will be added to Biden’s vote in January to boost the purchasing power of the U.S. government, the world’s largest buyer of goods and services, to strengthen domestic manufacturing and create markets for new technologies. (Report by Nandita Bose and Steve Holland in Washington; Additional Report by Alexandra Alper; Edited by Leslie Adler and Jonathan Oatis)