Biden to sign order tackling chip shortage amid automaker woes

United States President Joe Biden will sign an executive order on Wednesday aimed at addressing a global semiconductor chip shortage that has forced US automakers and other manufacturers to cut production and alarmed the White House and members of Congress, administration officials said.

The scarcity, exacerbated by the coronavirus pandemic, will be the subject when Biden meets with a bipartisan group of US lawmakers on Wednesday to discuss the issue.

Administration officials said Biden’s executive order, to be signed at 4:45pm (17:45 GMT) in Washington, DC on Wednesday, will launch an immediate 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 will also direct six sector reviews, modelled after the process used by the US Department of Defence to strengthen the defence industrial base. It will be focused on the areas of defence, public health, communications technology, transportation, energy and food production.

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 front-line workers.

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

“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,” the administration official added.

A group of US chip companies earlier this month urged Biden to provide “substantial funding for incentives for semiconductor manufacturing” as part of his economic recovery and infrastructure plans. Last summer they supported bipartisan legislation to provide “tens of billions of dollars” to help pay for chip manufacturing and research.

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 percent in the first quarter while General Motors said it was forced to cut output at factories in the US, Canada and Mexico and would reassess its production plans in mid-March.

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

Biden, a Democrat, has been under pressure from Republican lawmakers to do more to protect US 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],” US Representative Michael McCaul of Texas wrote in a recent letter to the White House from Republicans on the House of Representatives Committee on Foreign Affairs.

Under Biden’s order, the White House will look to diversify the US’s supply chain dependence for specific products such as rare earth minerals from China.

It will look to develop some of that production in the US 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 training 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.