US: President Biden urges CEOs to help end chip shortage

US domestic industries are struggling to keep up with demand for computer chips and semiconductors. The White House is offering billions in domestic aid to help boost production.

US President Joe Biden told senior executives on Monday that America was suffering from the global computer chip shortage, urging them to invest in domestic production as part of his infrastructure plan.

"We need to build the infrastructure of today, not repair the one of yesterday," Biden told the group of 19 corporate leaders from the technology, chip and automotive industries.

"China and the rest of the world is not waiting and there's no reason why Americans should wait."

Lockdowns produce surge in demand

Carmakers are competing with the consumer electronics industry for chip supplies as people spend more time at home during global coronavirus lockdowns.

The release of a new iPhone has already been delayed, demand for personal computers has surged, and automakers are cutting production owing to a lack of key parts, most notably the semiconductor wafers needed to make computer chips.

The supply crunch could lead to a potential 1.3 million-unit shortfall in U.S. car and lightduty truck production this year.

Broadband internet and cable TV companies also face delays in receiving network switches, routers, and servers.

How much does Biden want to spend on infrastructure?

President Biden said he had bipartisan support for fresh legislation to fund the chip industry — to the tune of $50 billion — as part of his drive to rebuild U.S. manufacturing as part of his $2 trillion infrastructure plan.

Biden and his top advisers view the semiconductor shortage as a "top and immediate priority," the White House said after the meeting.

CEOs of AT&T, Dell, Ford, General Motors, Stellantis (formerly Fiat Chrysler), Intel, Northrop Grumman, and others were all scheduled to attend.

But can the US really shake up supply chains at short notice?

But questions remain over what the Biden administration can really do to shake up US supply chains at such short notice. The industry typically has a production cycle of three to five years.

"Right now, there’s no structural changes that could alleviate the shortage," Wedbush analyst Daniel Ives told the Associated Press.

Intel Corp has said, however, that it will aim to make chips for car plants at its factories in the next six to nine months.

The U.S. has only 12% of the world's semiconductor wafer factory capacity, down from 37% in 1990, according to the Semiconductor Industry Association. China, Taiwan, South Korea and Japan combine to account for more than 70%.

“I think now it's just exposing the structural issues as well as some of the potential national security issues the US faces, given our reliance on Asia," Ives said.

jf/msh (AP, Reuters)

'This is infrastructure,' Biden told the CEOs, holding up a silicon wafer, a core component in making computer chips, imported in large part from Asia at present