Commerce chief says U.S. could help boost chips transparency

[May 21, 2021]  By David Shepardson

WASHINGTON (Reuters) -U.S. Commerce Secretary Gina Raimondo said Thursday she held meetings with three dozen senior industry leaders on a semiconductor chip shortage and said the United States could help boost transparency in the market.

The meeting included General Motors Co, Ford Motor Co, Stellantis NV, chip suppliers and other users of chips.

Raimondo and the Biden administration back $50 billion in U.S. government spending to dramatically boost U.S. semiconductor production and research, but it will take significant time for that spending - if approved by Congress - to boost supply.

Asked if there was any action the Biden administration could take to address short-term auto production issues, Raimondo suggested it could help with demand forecasting and address a "lack of transparency" around the chips market and various sector needs.

"We are thinking about ways that we might be able to help with more information-sharing between suppliers and consumers," Raimondo said.

"It may be that there is a role for the government to play, either in encouraging industry to do that or somehow helping to increase the transparency and information-sharing."

The global semiconductor chip shortage will cost automakers $110 billion in lost revenue this year, up from a prior estimate of $61 billion, consulting firm AlixPartners said last week, as it forecast the crisis will hit the production of 3.9 million vehicles.

Last month, Ford warned the chip shortage might slash second-quarter production by half, costing it about $2.5 billion and about 1.1 million units of lost production in 2021. GM has extended production halts at several North American factories because of the shortage. Both continue to announce new production cuts.

GM said in a statement it was "grateful for the Biden Administration’s support of this critical issue impacting the global auto industry and applaud Secretary Raimondo’s continued focus on the matter."

Reuters reported on May 5 the Biden administration had concerns about invoking the Defense Production Act, a 1950 law that allows the government to force companies to produce materials for national security reasons, quoting an official who said reallocating semiconductors to automakers "would result in fewer chips for others."

Asked Thursday if the administration had ruled out that approach, Raimondo said "that's a challenge because the shortage is affecting a large variety of industries", not just autos but electronics, technology companies, and medical device companies as well.

"We want to do everything we can but I think that's a challenge," Raimondo added.

U.S. Senate Democratic Leader Chuck Schumer unveiled revised bipartisan legislation late Tuesday that includes $52 billion in emergency funding to significantly boost U.S. semiconductor chip production and research over five years as part of a larger bill, but lawmakers are still debating provisions especially whether it should require companies to pay prevailing wages.

(Reporting by David Shepardson; editing by Jonathan Oatis and Stephen Coates)

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