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Biden wants to address the shortage of semiconductor chips

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Pledge By helping the White House address the ongoing global shortage of semiconductor chips, President (Joe Biden) said he is signing an Executive Order to conduct a supply chain review as well as developing a long-term strategy to avoid future shortages.

The reason for the current shortage is a combination of factors:

  • High demand for consumer electronic products due to lifestyle changes caused by the Coronavirus pandemic.
  • A slowdown in the production of semiconductor chips due to the effects of the Coronavirus pandemic.
  • Most companies are outsourcing the chip production, such as the Taiwan Semiconductor Manufacturing Corporation, TSMC, rather than building the parts themselves.
  • The lingering effects of former President Trump’s trade war with China that made it difficult for US companies to work with Chinese chip makers.

The result is that companies such as Apple, Qualcomm and Sony have all cited the shortfall in recent weeks, with impacts ranging from a partial shortage of iPhones to difficulty finding PlayStation 5 platforms or the latest AMD CPUs and GPUs.

In an increasingly interconnected world, the shortage of semiconductor chips not only affects traditional technology industries, but extends to a wide-ranging list of other industries.

Several auto companies, including Volkswagen, Fiat Chrysler and Toyota, have been forced to temporarily suspend vehicle production over the past several months.

Toward this end, the Biden administration is reported to be working with companies and trading partners to try to mitigate some of these issues.

Although it is good to see the US government looking to address this problem, the limited US involvement in the manufacture of physical semiconductors makes its actual pathways toward addressing this problem unclear.

The Semiconductor Industry Association, which includes AMD, IBM, Intel, Nvidia, Qualcomm and others, has proposed one idea in Message To Biden.

The group urged the administration to include substantial funding for semiconductor manufacturing incentives, in the form of grants or tax credits, and basic and applied semiconductor research in the upcoming stimulus package, but it is unclear whether the administration intends to do so.

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