Biden rushes to address global computer chip shortage via latest executive order

[February 24, 2021]  By Nandita Bose and Steve Holland

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

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

Administration officials said Biden's executive order, to be signed at 4:45 p.m. EST 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 - 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 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.

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

 President-elect Joe Biden delivers remarks on the U.S. response to the coronavirus disease (COVID-19) outbreak, at his transition headquarters in Wilmington, Delaware, U.S., December 29, 2020. REUTERS/Jonathan Ernst/File Photo

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

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)," said U.S. Representative Michael McCaul, in a recent letter to the White House from Republicans on the House of Representatives Foreign Affairs Committee.

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

It will look to develop some of that production in the United States 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 train U.S. 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 U.S. government, the world's biggest single buyer of goods and services, to strengthen domestic manufacturing and create markets for new technologies.

(Reporting by Nandita Bose and Steve Holland in Washington; Additional reporting by Alexandra Alper; Editing by Leslie Adler)

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