White House rushes to tackle global chip shortage | GeekComparison

Ford has cut production at its Chicago plant from three shifts to one as a global chip shortage is taking its toll on the auto industry.
enlarge / Ford has cut production at its Chicago plant from three shifts to one as a global chip shortage is taking its toll on the auto industry.

Scott Olson | Getty Images

The Biden administration has pledged to take immediate action to address a global semiconductor shortage that has forced the closure of several US auto plants.

White House press secretary Jen Psaki said the administration “identified potential supply chain bottlenecks” after coming under pressure from lawmakers, semiconductor companies and automakers over the shortages.

A surge in consumer electronics demand during the pandemic has led to a chip shortage, which has been exacerbated in the US by sanctions against Chinese chipmaker SMIC.

It has crippled automakers around the world as chip makers diverted deliveries for consumer electronics customers, who pay more for semiconductors.

A White House official said the administration was “actively in talks” with auto companies, semiconductor groups and foreign diplomats in an effort to address the problem.

President Joe Biden will sign an executive order in the coming weeks demanding “a comprehensive overhaul of critical goods supply chains,” Psaki said.

She added: “The review will focus on identifying the immediate actions we can take, from improving physical production of those items in the US to working with allies to develop a coordinated response to the weaknesses and bottlenecks that hurt American workers.”

General Motors and Ford have shut down factories in response to the chip shortage. GM plants in Kansas, Canada and Mexico will halt vehicle production until mid-March, while Ford said it would cut shifts this week at two plants producing its best-selling F-150 pickup truck.

Both companies predict significant blows to their cash flow and profits this year due to the deficit. GM said the deficit could save up to $2 billion in earnings before interest and taxes; Ford said profits could drop to $2.5 billion.

The automakers said they were working with suppliers to manage the shortage and tried to allocate chips to more profitable vehicles where possible.

The impact on the auto industry has caught the attention of US lawmakers. Last week, 15 senators, including Senate Majority Leader Chuck Schumer, urged the White House to take action on the deficit, which they said posed a threat to the “post-pandemic US economic recovery.”

The senators advised the White House to secure funding approved by Congress last year in the CHIPS bill to boost domestic semiconductor manufacturing.

The crisis facing automakers has also fueled the demand to move semiconductor manufacturing to the US for national security reasons.

On Thursday, the top executives of major semiconductor companies wrote to Biden to demand that financing for domestic semiconductor manufacturing be included in his infrastructure recovery plan.

The letter, signed by the CEOs of Intel, Qualcomm and GlobalFoundries, among others, pointed to the declining share of the US in global chip production over the past three decades. Without further support, the letter warned, the country’s “tech leadership is at risk.”

© 2021 The Financial Times Ltd. All rights reserved. May not be redistributed, copied or modified in any way.

Leave a Comment