The Community Connection

Semiconduc­tor shortage highlights urgency of U.S. import dependence

- By Michael Stumo Guest columnist Michael Stumo is CEO of the Coalition for a Prosperous America. Follow him at @ michael_stumo.

In recent weeks, U.S. automakers have been hit hard by a global shortage of semiconduc­tors. It’s the latest problem stemming from America’s overrelian­ce on a wide range of industrial imports.

With the COVID-19 pandemic having disrupted global supply chains, U.S. automakers are now scrambling to find adequate supplies of the computer chips that run everything from power steering and navigation systems to collision sensors. The issue is serious enough that both GM and Ford have halted production.

The Biden administra­tion is racing to address the problem — along with other serious supply chain vulnerabil­ities. The president has already issued an executive order identifyin­g key import dependenci­es, including semiconduc­tors. It’s a promising start, but the United States must rapidly rebuild its domestic chipmaking industry in order to lessen the nation’s dependence on overseas suppliers.

Why are semiconduc­tors so important? Because computer chips are the “brains” of not just computers, cars, and medical devices but also the weapons systems that support America’s military. Being so dependent on imported computer chips leaves America’s national security vulnerable to the whims of the global market.

Right now, Taiwan is a key player in the chip industry. Taiwan Semiconduc­tor Manufactur­ing Company (TSMC) alone accounts for more than half of global chip revenues. However,

China has invested a stunning $120 billion

to dominate future semiconduc­tor production — something that could endanger U.S. security when chips are used for sensitive products and installati­ons.

The time has come for the United States to bring back its semiconduc­tor manufactur­ing industry. But how to do it?

President Biden’s executive order offers a helpful template, since it encompasse­s both the current semiconduc­tor shortage and the raw materials needed to build computer chips, medical devices, and electric vehicle batteries.

Modern industry is built on semiconduc­tors, which in turn are made from a wide array of minerals, including silicon, graphite, copper, gallium, and rare earth metals.

What’s worrying is the degree to which China dominates the global supply of these crucial resources. For example, China controls 70 percent of the world’s lithium supplies, 80 percent of rare earth metals, and roughly 70 percent of the world’s graphite.

These materials are irreplacea­ble for producing everything from electric vehicle batteries to solar panels and semiconduc­tors.

To get back in the computer chip business, the United States must not only rebuild domestic chipmaking foundries but also start sourcing needed minerals and metals at home.

Doing so would be the first step to ensure a secure, responsibl­y produced supply chain for U.S. industry. Worryingly, America’s mineral import reliance has doubled

in just the past two decades — even though the U.S. is home to an estimated $6.2 trillion in mineral reserves. Rebuilding semiconduc­tor production must happen in parallel with a resurgence in America’s mining sector.

Congress and the president should implement reforms to support a substantia­l increase in U.S. chip manufactur­ing, with a goal of producing 50 percent of semiconduc­tors in every major category.

Policymake­rs should also ensure that semiconduc­tor inputs and equipment are not sold to entities with Chinese military ties.

Relaunchin­g America’s computer chip industry could create hundreds of thousands of goodpaying manufactur­ing jobs. The U.S. can resume its position as the world’s leading manufactur­er of semiconduc­tors — something that would strengthen national security and America’s industrial self-sufficienc­y.

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Michael Stumo

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