President Joe Biden signed an executive order on Wednesday to address a global chip shortage that affects sectors 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, longer-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, said Biden at a press event on Wednesday before signing the order.
The action follows appeals from bipartisan members of Congress and industry leaders warning of the possible consequences of the scarcity. Commonly known as chips, semiconductors are used to power electronic devices, 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 national security”.
Biden met with a bipartisan group of lawmakers on Wednesday to discuss the shortage and said he was “very productive”. He praised the cooperative nature of the meeting, saying “it’s like the old days, people were really on the same page”.
The semiconductor supply chain was hit early in the pandemic, as many of the world’s chips are manufactured in places like China and Taiwan. The health crisis has highlighted problems with the US reliance on overseas supply chains in many areas, and the semiconductor industry is no different. According to the Semiconductor Industry Association, a coalition supported by several chip makers, the United States accounts for only 12.5% of semiconductor manufacturing.
The shortage has already impacted several companies. Ford said earlier this month that reduced supplier estimates could mean the loss of up to 20% of its production expected in the first quarter. General Motors said earlier this month that it would extend downtime at several plants due to the shortage and would “reevaluate in mid-March”. On Wednesday, before the executive order was announced, however, GM CFO Paul Jacobson said the worst of the chip shortage may be over.
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 US should encourage new semiconductor factories to be established in the country to compete effectively with others nations that have already invested in chip production.
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