Shortage of computer chips worries carmakers in the US 

The scarcity of semiconductors across the globe has Washington worried, with domestic production lines grinding to a halt - even though the US claims 47% of chip sales, it only makes 12% at home 

by Sean OMeara
Shortage of computer chips worries carmakers in the US
Biden has been under pressure from Republican lawmakers to do more to protect US supply chains. Reuters file photo.

President Jo Biden has ordered an urgent review of the semiconductor supply chain with US manufacturers struggling to cope with a global chip shortage.

Washington said Biden's executive order, signed on Wednesday, will launch an immediate 100-day investigation of the supply chains for four critical products – semiconductor chips, large-capacity batteries for electric vehicles, rare earth minerals and pharmaceuticals.

The chip shortage, which has forced some automakers to slow down production lines, is the latest example of supply bottlenecks hurting American workers.

The US has been besieged by supply shortages since the onset of the pandemic, which squeezed the availability of masks, gloves and other personal protective equipment, hurting frontline workers.

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On top of all this, even the winter storm ravaging the country has forced the shutdown of computer chip manufacturing in Texas, threatening to make the semiconductor shortage even worse.

NXP Semiconductors, a major provider of automotive and mobile phone chips, said its plant in Austin, Texas, had been closed amid the state's electric power difficulties.

Biden’s review will also look at six specific sectors – defence, public health, communications technology, transportation, energy and food production.

'CLOSE GAPS'

"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," an administration official said.

The chip scarcity has quickly grown into a major headache for the White House.

Ford Motor Co recently said a lack of chips could cut the company's production by up to 20% in the first quarter while General Motors said it was forced to cut output at factories in the United States, Canada and Mexico and would reassess its production plans in mid-March.

US semiconductor firms account for 47% of global chip sales but only 12% of production, because they have outsourced much of the manufacturing overseas, according to the Semiconductor Industry Association. In 1990, the US accounted for 37% of global semiconductor production.

UNDER PRESSSURE

Biden has been under pressure from Republican lawmakers to do more to protect American supply chains from China by investing in domestic manufacturing of next-generation semiconductor chips.

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 said.

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

The supply chain executive order will add to Biden's vow in January to leverage the purchasing power of the US government, the world's biggest single buyer of goods and services, to strengthen domestic manufacturing and create markets for new technologies.

With reporting by Reuters & AFP

Note: The headline on this report was changed on February 25.

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