Computer chip shortage alarms Biden, Congress
WASHINGTON — President Joe Biden will meet Wednesday with a bipartisan group of lawmakers to confront growing concern about a global shortage of semiconductors that is hobbling automakers and other manufacturers and has led to production cutbacks.
News of the meeting, confirmed by people familiar with the matter, came as Senate Majority Leader Chuck Schumer, D-N.Y., called for Congress to appropriate funds it previously had authorized for domestic semiconductor manufacturing, calling the current lack of production capacity “a dangerous weak spot in our economy and in our national security.”
Commonly known as chips, semiconductors are critical to the functioning of a wide range of everyday products, from cellphones to computers to state-ofthe-art refrigerators. They are also the brains that operate an array of weapons systems.
The chip shortage began after the coronavirus pandemic hit last year. As global demand for automobiles fell, car companies cut production and their purchases of semiconductors needed to build cars. At the same time, demand for semiconductors soared from companies making computers and other equipment that allowed employees to work from home, according to the Semiconductor Industry Association.
Then when auto production recovered, car companies faced a shortage of semiconductor supplies.
The scarcity has had serious consequences. Ford this month said a lack of chips could cut the company’s production by up to 20 percent in the first quarter. The automaker was forced to reduce the output of its profitable F-150 pickup at two factories in Michigan and Missouri.
General Motors said it was forced to cut output at factories in Kansas, Canada and Mexico and would reassess its production plans in mid-March.
The chip shortfall is reviving calls from industry and members of Congress for more federal funding to subsidize domestic chip manufacturing.
In a letter to Biden this month, lobbying groups for the auto, health-care and telecommunications sectors pressed the White House to work with Congress to provide more funding for domestic chip research and production.
“While the governments of our global competitors have invested heavily to attract new semiconductor manufacturing and research facilities, the absence of U.S. incentives has made our country uncompetitive and America’s share of global semiconductor manufacturing has steadily declined as a result,” the groups wrote.
White House press secretary Jen Psaki this month said the chip shortage is “one of the central motivations” for an executive order Biden plans to sign soon “to undertake a comprehensive review of supply chains for critical goods.”
“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 coordinated response to the weaknesses and bottlenecks that are hurting American workers,” Psaki said.
U.S. semiconductor companies account for 47 percent of global chip sales but only 12 percent of manufacturing, because they have outsourced much of the manufacturing overseas, a trade group said.