President Joe Biden plans to sign an executive order to address the global semiconductor chip shortage that has forced U.S. automakers to halt production in recent weeks. The scarcity of microchips, used to power everything from infotainment systems to safety features, has been growing worse since last December. The shortage has already forcing major U.S. automakers General Motors and Ford to temporarily suspend production. Even with international suppliers trying to ramp up production, the auto industry has been hit hard by this bottleneck. It remains to be seen exactly what President Biden can do to address the issue.
A 100-Day Review
Biden is scheduled to meets with a bipartisan group of U.S. lawmakers at the White House in the coming days. They will discuss the issue and how to potentially resolve it. Following the meeting, President Biden is expected to sign an executive order that will launch an immediate 100-day review of supply chains for semiconductor chips. The review will also include large-capacity batteries for electric vehicles and rare earth minerals used to produce EV batteries.
The microchip shortage, which is forcing many employees off production lines, is the latest example of supply bottlenecks hurting American manufacturing and workers. Ford recently said thelack of chips could cut the company’s production by up to 20% in the first quarter. Meanwhile, GM was forced to cut output at factories in the United States, Canada, and Mexico until at least mid-March.
Semiconductor firms in the U.S. account for 47% of global chip sales, but only 12% of production. They have outsourced much of the manufacturing to overseas locations such as China and Taiwan. In 1990, the U.S. accounted for as much as 37% of global semiconductor production. As a result, the domestic auto industry is now at the mercy of foreign supply chain issues more than ever.
Protecting American Supply Chains
Biden has been under pressure from Republican lawmakers to do more to protect American supply chains from China. They want him to invest more in the domestic manufacturing of next-generation semiconductor chips.
Under Biden’s executive order, the White House will look to diversify the United States’ supply chain. It will also attempt to lessen the U.S.’s dependence on specific products that are typically mined in China, like rare earth minerals. The review will look at limiting imports of certain materials from China. It will also aim to train more U.S. workers to ramp up productions within its own borders.
The executive order will add to President Biden’s recent vow to leverage the purchasing power of the U.S. government. The federal government is already the world’s biggest single buyer of goods and services. The President will hopefully be able use that buying power to strengthen domestic manufacturing and create markets for new technologies.
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