Cramer asks the US to finance factories to deal with chip shortages and unemployment

CNBC’s Jim Cramer said on Wednesday that the United States should fund the development of a chip-making compound in an effort to address the country’s high unemployment rate and chip shortages that are affecting American companies. .

More and more companies, including automakers like Ford and General Motors, have recently sounded the alarm about the global supply of components, causing them to reduce production of their own products.

Meanwhile, the United States job market, with an unemployment rate of 6.3%, is struggling to gain momentum out of the coronavirus-induced recession.

“We need more chips and more jobs,” said Cramer in “Mad Money”. “Why not kill two birds with one stone? It is time for our government to invest in the construction of the largest and best semiconductor foundry complex … in the world ”.

Automobiles are becoming more and more technological, which requires silicon chips for things like power steering, brake sensors and entertainment devices. The scarcity of supply has forced GM and Ford to close factories, delaying delivery of new cars. GM warned that the disruption could impact its 2021 targets.

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

The more connected cars become, the more semiconductors are needed.

“Believe me, you will start hearing about this shortage constantly, daily, because it is wreaking havoc in all types of industries and making us a much less competitive company and maybe even hostage. Hostage of a larger chip customer, PRC (China). We have to go ahead of that, “said Cramer.

“Our companies cannot get enough chips because there is not enough production worldwide, and this lack of chips is hurting all types of manufacturing,” he added.

He signaled that he is optimistic about Gina Raimondo, the Rhode Island governor who was appointed by President Joe Biden to lead the United States Department of Commerce. Raimondo is a former venture capitalist, which gives her an ideal perspective on the business world, said Cramer.

He also said that the low interest rate environment could be a catalyst to help finance the federal bond project.

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

“In the meantime, building gigantic semiconductor foundries can put more people to work than any other infrastructure project.”

Disclosure: Cramer’s charity fund has Ford shares.