President Joe Biden signed an executive order on Wednesday aimed at addressing a global chip shortage impacting industries ranging from medical supplies to electric vehicles.
The order includes a 100-day evaluation of key products, including semiconductors and advanced batteries used in electric vehicles, followed by a broader long-term review of six economic sectors. The long-term review will enable policy recommendations to strengthen supply chains, with the aim of rapidly implementing the suggestions, Biden said at a press event on Wednesday before signing the order.
The move follows calls from bipartisan members of Congress and industry leaders warning of the potential consequences of the shortage. Semiconductors, commonly known as chips, are used to power electronics, including telephones, electric vehicles, and even some medical supplies. Senate leader Chuck Schumer, DN.Y., said that “semiconductor manufacturing is a dangerous vulnerability in our economy and in our national security.”
Biden met with a bipartisan group of lawmakers on Wednesday to discuss the deficit, saying it was “very productive.” He praised the cooperative nature of the meeting, saying, “It’s like the old days, people were actually on the same page.”
The semiconductor supply chain had taken a hit early in the pandemic, as many of the world’s chips are manufactured in places like China and Taiwan. The health crisis has underscored the problems with the US’s reliance 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 US only accounts for about 12.5% of semiconductor production.
The shortage is already affecting several companies. Ford said earlier this month that lower supplier estimates could lose up to 20% of projected production in the first quarter. General Motors said earlier this month that it would extend downtime at several manufacturing sites due to the shortage and would “reassess in mid-March.” However, on Wednesday, ahead of the announcement of the executive order, GM CFO Paul Jacobson said the worst of the chip shortage may already 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 plants in the country to compete effectively with other countries invested in the production of potato chips.
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