WASHINGTON – Car manufacturers have been forced to suspend production due to a lack of computer chips. Healthcare workers fighting the coronavirus pandemic had to do without masks while the United States waited for supplies from China. And pharmaceutical executives are worried that the stock of critical medicines could dry up if countries want to accumulate key ingredients and impede exports.
Deepest disruptions in the global movement of critical goods during the pandemic prompted President Biden on Wednesday to take steps to reduce the country’s dependence on foreign materials. He has issued an executive order requiring his administration to review critical supply chains with the goal of strengthening U.S. semiconductor manufacturing, pharmaceuticals and other leading technologies.
In remarks in the White House, the president pointed to the move as an important step towards creating well-paying jobs and making the economy more resilient in the face of geopolitical threats, pandemics and climate change.
“It’s about making sure the United States can meet every challenge we face in the new era,” he says.
But the effort, which offers dual support, will do little to resolve global shortcomings immediately, including semiconductors – a key component in automobiles and electronic devices. A lack of these components has forced several major U.S. automakers to halt or reduce production, leaving the administration scrambling to call on allies like Taiwan for emergency supplies.
Administration officials said the mission would not provide a quick fix, but would begin an effort to isolate the U.S. economy from future shortages of critical imported components.
Mr. Biden discussed the issue Wednesday afternoon in the Oval Office with nearly a dozen Republican and Democratic members of Congress. Senator Chuck Schumer, a Democrat from New York and the majority leader, called for a bill to be drafted to deal with this quarter in the spring.
“Right now, semiconductor manufacturing is a dangerously weak spot in our economy and in our national security,” Schumer said. ‘Our car industry has a serious shortage of chips. This is a technology created by the United States; we should lead the world in it. The same goes for the expansion of 5G, the next generation telecommunications network. There is dual interest in both of these issues. ”
Republicans emerged optimistic from the White House meeting that such efforts could continue soon. Representative Michael McCaul, a Republican from Texas, said he was pleased to see that the White House is making the issue a top priority and that the president is receptive. “His words were, ‘Look, I’m all in,’ ‘he said.
Mr. McCaul said much of the discussion was about legislation passed by Congress last year to boost the chip industry – but which still requires funding for research grants and a repayable investment tax credit – as well as the current chip shortage and possible looming work. losses in the automotive industry.
“China is investing $ 1 billion in its digital economy,” he said. McCaul said. “If we’re going to be competitive, we need to encourage these companies to manufacture these advanced chips in the United States.”
Mr. Biden calls the meeting one of the best so far in his presidency. “It was like the old days,” he said. “People were actually on the same page.”
The president ordered a year-long six-sector review and a 100-day review of four classes of products on which U.S. manufacturers rely on imports: semiconductors, high-capacity batteries, pharmaceuticals and their active ingredients, and critical minerals and strategic materials, such as scarce earth.
Additional actions to strengthen the supply chains will depend on the vulnerability identified, officials said.
“We are no longer going to respond to supply chain crises as they arise, and we will try to prevent future supply chain problems,” Peter Harrell, senior director of the White House for International Economics and Competitiveness, told reporters during ‘ a newsletter.
The executive order was not aimed at importing any particular country, but it is seen as an early salvo in the government’s economic struggle with China. Beijing’s dominance of global supply chains for raw materials and critical products, such as medical masks, has expressed deep concern that its authoritarian government could cut off the United States, causing even greater economic disruption.
Early in the coronavirus pandemic, China diverted exports of surgical masks and protective equipment to its local governments and hospitals, leaving foreign buyers empty-handed. Along with India, China is also a major source for the active ingredients that include vital drugs, including antibiotics and painkillers.
China has also from time to time banned the export of rare earth materials essential for the manufacture of electronics, fighter jets and weapons; he proposed new export curbs this year.
China, which supplies most of the world’s supply of rare earths, uses much of its own to set up domestic supply chains, which have declined in recent months with exports, said Pini Althaus, chief executive of the US Rare Earth, said. developing a precipitation of rare earth and lithium in Texas.
Without these minerals, the United States would not be able to manufacture quantum computers, deploy a 5G network, or make electric vehicles, he said.
“Panic is beginning to ensue in a number of industries and a number of government agencies because we are currently in a very precarious position,” he said. Althaus said.
Mr Schumer announced on Wednesday that he had ordered the leaders and members of the Senate committees to draft a new legislative package to outdo China and create new US jobs. He said he intended to place the bill, which would build on the dual boundary law he introduced last year, on the Senate floor for a vote this spring.
The legislation would encourage investment in U.S. semiconductor manufacturing, which he called a “dangerously weak spot in our economy,” as well as 5G, artificial intelligence and biomedical research.
“I want the bill to address America’s short- and long-term plan to protect the semiconductor supply chain and to keep us number 1 in things like AI, 5G, quantum computing, biomedical research, storage,” Schumer said. “We need to bring an account to the president’s desk so quickly.”
The semiconductor industry has violated both the ambitious legislation of Congress and the executive order of Mr. Pray welcome.
Bob Bruggeworth, chairman of the Semiconductor Industry Association and CEO of Qorvo, a semiconductor company, said his industry was ready to work with the Biden administration. Did he insist the President and Congress to “invest ambitiously” in manufacturing and research.
“In this way, more of the chips our country needs will be produced on the American shores, while also promoting sustained American leadership in technology, which is at the heart of America’s economic strength and job creation, national security and critical infrastructure,” “Mr. Bruggeworth said.
But semiconductor industry analysts say the government is unlikely to do much to address the short-term chip shortage. Most chip factories operate at maximum capacity, and the expansion of production is likely to take at least three to six months, if not longer.
The Biden government has tried to appeal to Taiwan and other major chipmakers to put U.S. manufacturers at the top of their list. But General Motors and Ford were forced to close factories and limit production; both estimate that the shortage of chips will reduce their operating profit by at least $ 1 billion this year. A GM manager said at a Wolfe Research conference on Wednesday that the company has begun to see the situation improve over the past few weeks.
Charlie Chesbrough, a senior economist at Cox Automotive, said that the executive order of Mr. Praying would probably have little impact on the automotive industry in the short term, as supply chains are generally determined years in advance.
“The tighter inventory issues in the market today and the slowdown in the plant caused by a shortage of computer chips are expected to be with us for most of 2021,” he said.
“Executive order or not.”