President Biden Targets Silicon Shortage With Executive Order


Chip shortage targetted by US executive order that will review supply chains for four critical products experiencing shortages

US President Joe Biden is to sign an executive order later on Wednesday to tackle a number of pressing shortages for four critical products, including computer chips.

The executive order is aimed at addressing the global semiconductor chip shortage (and other shortages) that has forced car makers and other manufacturers to cut production and which has alarmed the White House and members of Congress, Reuters quoted administration officials as saying.

President Biden is reportedly to meet a bipartisan group of US lawmakers on Wednesday to discuss the issue, and will sign the executive order at 4:45pm EST (9.45pm GMT) Wednesday.

Executive order

The Biden administration promised action on the silicon shortage last week, and held meetings with automotive companies and suppliers to identify chokepoints and urged companies to work cooperatively to tackle the shortage.

But the executive order to be signed will, according to Reuters, launch an immediate 100-day review of supply chains for four critical products.

These critical products are semiconductor chips; large-capacity batteries for electric vehicles; rare earth minerals; and pharmaceuticals.

The order will also reportedly direct six sector reviews – modelled after the process used by the US Defense Department to strengthen the defense industrial base.

It will be focused on the areas of defense, public health, communications technology, transportation, energy and food production.

“Make no mistake, we’re not simply planning to order up reports. We are planning to take actions to close gaps as we identify them,” the administration official reportedly said.

Car production

The silicon shortage has had a dramatic impact on car production around the world.

Last week, German car maker VW publicly blamed poor planning by chip makers as the principle reason for most car brands around the world have had to to reduce factory production.

Audi (part of the Volkswagen group) also warned it was having to slow production because of the chip shortage, forcing it to make 10,000 fewer cars in the first quarter of the year and putting more than 10,000 workers on furlough.

Daimler (which makes Mercedes), Fiat, Honda, Ford, Nissan, Subaru and Toyota all reportedly have had to suspend production for days or weeks at a time.

Earlier this month Mazda warned it would cut its global output by 7,000 vehicles in February and March.

General Motors also confirmed it was extending its production cuts at three North American factories.

Ford meanwhile warned this month the chip shortage could lead to a 10 to 20 percent loss in first-quarter production.

Samsung also recently warned that a global shortage in semiconductors for cars could have a knock-on effect on the memory chips used in smartphones.

Supply chain

American semiconductor firms account for 47 percent of global chip sales but only 12 percent of production, because they have outsourced much of the manufacturing overseas, mostly to Asia.

Under Biden’s order, the White House will look to diversify the United States’ supply chain dependence for specific products such as rare earth minerals from China.

It will look to develop some of that production in the United States and partner with other countries in Asia and Latin America when it cannot produce such products at home, the official was quoted by Reuters as saying..

The review will also look at limiting imports of certain materials and train US workers to ramp up production at home.