The White House has pledged to help address the ongoing global semiconductor shortage, with President Joe Biden said to be signing an executive order to conduct a supply chain review along with developing a long-term strategy to avoid future shortages, via Bloomberg.
The cause of the current shortage is due to a mixture of factors: spikes in demand for consumer electronic products like laptops due to changes in lifestyle caused by the COVID-19 pandemic; slowdowns in chip production also caused by the pandemic; a business model in the semiconductor industry that sees most companies outsource chip production to firms like Taiwan Semiconductor Manufacturing Company (TSMC) instead of building the parts themselves; and lingering effects from former President Donald Trump’s trade war with China that made it harder for US companies to work with Chinese chip producers.
The shortage impacts everything from PS5s to Ford F-150s
The result is companies like Apple, Qualcomm, Sony, and AMD have all cited shortages in recent weeks, with effects ranging from part shortages for iPhones to the incredibly hard-to-find nature of the PlayStation 5 or AMD’s newest CPUs and GPUs.
But in today’s increasingly connected world, a shortage of semiconductor chips impacts not only traditional technology industries, but also a wide-ranging list of other industries. Numerous automotive companies — including Volkswagen, Fiat Chrysler, and Toyota — have been forced to temporarily suspend vehicle production over the past several months. And Ford just announced that it would be pausing manufacturing on its most lucrative F-150 trucks earlier this month in the wake of chip shortages.
To that end, the Biden administration is reportedly working with businesses and trade partners to try to alleviate some of these issues. And while it’s good to see the US government looking to address the issue, the United States’ limited involvement in physical semiconductor manufacturing makes its actual avenues toward addressing the issue unclear.
The Semiconductor Industry Association, which includes AMD, IBM, Intel, Nvidia, Qualcomm, and others, suggested one idea in a letter to Biden on Thursday morning. The group urged the administration to include “substantial funding for incentives for semiconductor manufacturing, in the form of grants and / or tax credits, and for basic and applied semiconductor research,” in the upcoming stimulus package. But it’s unclear if the administration intends to do that.
Update February 11th, 6:26PM ET: Added letter from the Semiconductor Industry Association.