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Biden signs executive order to address chip shortage through a review to strengthen supply chains

Biden signs executive order to address chip shortage through a review to strengthen supply chains "A pile of pallets"

President Joe Biden signed an executive order Wednesday meant to address a global chip shortage impacting industries ranging from medical supplies to electric vehicles.

The order includes a 100-day review of key products including semiconductors and advanced batteries used in electric vehicles, followed by a broader, long-term review of six sectors of the economy. The long-term review will allow for policy recommendations to strengthen supply chains, with the goal of quickly implementing the suggestions, Biden said at a press event Wednesday before he signed the order.

The action follows calls from bipartisan members of Congress and industry leaders warning about the potential consequences of the shortage. Commonly known as chips, semiconductors are used to power electronics including phones, electric vehicles and even some medical supplies. Senate Majority Leader Chuck Schumer, D-N.Y., said that “semiconductor manufacturing is a dangerous weak spot in our economy and in our national security.”

Biden met with a bipartisan group of lawmakers Wednesday to discuss the shortage and said it was “very productive.” He praised the cooperative nature of the meeting, saying, “it’s like the old days, people actually were on the same page.”

The semiconductor supply chain had taken a hit early in the Covid pandemic since much of the world’s chips are manufactured in places like China and Taiwan. The health crisis has underscored issues with U.S. reliance on supply chains abroad in many areas, and the semiconductor industry is no different. According to the Semiconductor Industry Association, a coalition backed by several chipmakers, the U.S. only accounts for about 12.5% of semiconductor manufacturing.

The shortage has already impacted several companies. Ford said earlier this month that reduced estimates from suppliers could mean losing up to a 20% of its expected first-quarter production. General Motors said earlier this month that it would extend downtime at several production plants due to the shortage and would “reassess in mid-March.” On Wednesday, ahead of the executive order announcement, however, GM CFO Paul Jacobson said the worst of the chip shortage may actually be over already.

In a letter to Biden last week, several industry associations including SIA, the Advanced Medical Technology Association and the Motor & Equipment Manufacturers Association wrote that the U.S. should incentivize new semiconductor manufacturing plants to be established in the country to compete effectively with other nations that have invested in chip production

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