Biden Administration Working to Address Chip Shortage Affecting Auto Makers

Date: Monday, February 15, 2021
Source: Wall Street Journal

WASHINGTON—The Biden administration said Thursday it is working to address a global chip shortage that is hurting U.S. auto makers and other industries, aiming to free up supply-chain choke points.

President Biden will sign an executive order in the coming weeks that will involve a comprehensive review of supply chains for critical goods, White House press secretary Jen Psaki said.

“The review will be focused on identifying the immediate actions we can take, from improving the physical production of those items in the U.S. to working with allies to develop a coordinate response to the weaknesses and bottlenecks that are hurting American workers,” she said.

A White House official said the administration is having conversations with auto companies, semiconductor firms and lawmakers “to see what actions can be taken to make sure American workers are not being negatively impacted by this shortage, and that there continues to be access to essential goods during this pandemic.” The official said the administration also is looking for longer-term solutions.

“While we are focused on the near-term actions we can take, it is also critical to identify more durable solutions to addressing the longstanding issues faced by the semiconductor industry and the end users of these goods,” the official said.

A run on chips in recent months has strained global supplies of critical components in a range of electronic devices that have been in demand as people work from home during the coronavirus pandemic. Auto makers have been especially hard hit by shortages of chips that go into numerous systems, from modules that manage engines to automatic braking and assisted driving technologies.

The shortages have forced auto plants across the world to slow down or stop assembly lines entirely as auto makers try to funnel scarce chips to their most profitable models. Volkswagen AG said in December that it was reducing output at many of its factories around the world.

Shutdowns in Japan and the U.S. soon followed. Last week, Ford Motor Co. said that it would be taking down production of its flagship F-150 pickup truck, one of the company’s most profitable and popular models. General Motors Co. said this week it was extending shutdowns at some North American plants into March.

The industry has pressed the White House to address the shortage, stressing its impact on the hundreds of thousands of Americans employed in auto and parts manufacturing.

“Given the number of jobs that may hinge upon a handful of chips in a vehicle, we think it makes sense to prioritize the auto sector,” said Matt Blunt, president of the American Automotive Policy Council, which represents GM, Ford and Stellantis NV in Washington.

Earlier this month, 15 senators representing states with a significant auto industry presence signed a letter sent to the administration imploring it to take action to address the shortage with semiconductor-producing companies and their home countries’ governments.

The chip industry has said the shortage points to the need for more investment in U.S. manufacturing and research, and it is pushing for government incentives to pump billions of dollars into that effort. In a Thursday letter, top executives at the country’s leading chip makers urged Mr. Biden to include funding for chip-manufacturing incentives in his infrastructure and recovery plans, citing the decline of the U.S. share of global chip-making in recent decades.

It can take months, if not years, to significantly expand production capacity, according to industry executives. Taiwan Semiconductor Manufacturing Co. , the largest contract chip maker in the world, announced a new plant in Arizona last year, but it isn’t expected to be operational until 2024. South Korea’s Samsung Electronics Co. , another leading chip maker, is exploring a new $17 billion factory in the U.S. that it hopes will start production late next year.

The White House also has said it is conducting a review of former President Trump’s trade policies. Under Mr. Trump, the Commerce Department put dozens of Chinese companies onto an export blacklist, often targeting the ability of Chinese companies to make and buy advanced chips. In September, China’s largest chip maker, Semiconductor Manufacturing International Corp. , was placed on that list, requiring U.S. companies to get licenses before exporting to it.


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