Business World

Biden to ask for $37B to boost chip production amid shortfall


WASHINGTON — President Joseph R. Biden said on Wednesday he would seek $37 billion in funding for legislatio­n to supercharg­e chip manufactur­ing in the United States as a shortfall of semiconduc­tors has forced US automakers and other manufactur­ers to cut production.

Mr. Biden also signed an executive order on Wednesday aimed at addressing the global semiconduc­tor chip shortage that has alarmed the White House and members of Congress, administra­tion officials said.

The scarcity, exacerbate­d by the pandemic, was also the subject of a discussion between Mr. Biden and a bipartisan group of US lawmakers at the White House on Wednesday.

“I’m directing senior officials in my administra­tion to work with industrial leaders to identify solutions to the semiconduc­tor shortfall,” Mr. Biden said on Wednesday. “Congress has authorized a bill but they need ... $37 billion to make sure that we have this capacity. I’ll push for that as well.”

The White House said his remarks were in reference to measures aimed at boosting chip manufactur­ing capacity that were included in this year’s National

Defense Authorizat­ion Act but which require a separate appropriat­ions process to garner funding.

The chip industry has pressed the Biden administra­tion and Congress to take action to fund the provisions of the law. “We urge the president and Congress to invest ambitiousl­y in domestic chip manufactur­ing and research,” the Semiconduc­tor Industry Associatio­n (SIA) said earlier on Wednesday.

Mr. Biden’s executive order launched a 100-day review of supply chains for four critical products: semiconduc­tor chips, large-capacity batteries for electric vehicles, rare earth minerals and pharmaceut­icals.

The order also directs six sector reviews, modeled after the process used by the 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.

The United States 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.

The chip shortage, which in some cases is forcing automakers to take employees off production lines, is the latest example of supply bottleneck­s.

“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 previewing the executive order said.

Democratic lawmakers present at Wednesday’s meeting were Senators Mark Warner, Tammy Baldwin, Tammy Duckworth and Maggie Hassan along with Representa­tive Doris Matsui. The Republican­s comprised Senators John Cornyn, Mike Braun, Marsha Blackburn, Rob Portman and Representa­tives John Joyce and Michael McCaul.


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

Ford praised Mr. Biden’s plan on Wednesday and said in a statement that it was “incredibly important for our labor force, our customers and our business that we have a commitment to end this shortage as soon as possible.”

US semiconduc­tor companies account for 47 percent of global chip sales, but only 12 percent of global manufactur­ing is done in the United States, according to the Semiconduc­tor Industry Associatio­n.

Mr. 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.

“I strongly urge Biden administra­tion to prioritize protecting emerging and critical technologi­es, like semiconduc­tors, from the grasp of the CCP (Chinese Communist Party),” Mr. McCaul said in a recent letter.

Under Mr. Biden’s order, the White House will look to diversify the country’s supply chain dependence for certain products, by developing domestic production and partnering with other countries in Asia and Latin America when it cannot produce products at home.

The review will also look at limiting imports of certain materials and training US workers. —

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