Disturbed by a profound shortage of semiconductor chips, the American government is trying to work quickly to solve the problem.
In the past few weeks, we reported on how the global auto industry, blindsided by chip shortages, is competing with other sectors like entertainment and communications to source the microprocessors needed for a vast array of new vehicle technologies being built in at the factory.
Today, news breaks that the Biden administration is signing an executive order for a 100-day supply chain review of semiconductor chips, along with several other major types of supplies including electric vehicle batteries, rare earth metals and some pharmaceutical products.
In looking at the availability of semiconductors and other supplies, the government is going to be pondering six different sectors according to a DoD model, in order to analyze how the country is doing in sourcing items related to defense, public health, communications, transportation, energy and food production.
As for why the semiconductor chip shortage is so dire, analysts point to a few key reasons. One is the enormous demand for electronics brought on by realities around the coronavirus pandemic. However, another one that’s receiving a lot of attention is the policies of the prior U.S. administration that put a lot of pressure on some tech companies by trying to blacklist Chinese products.
As CNBC explains, the Trump White House starved the Chinese SMIC semiconductor company of resources, requiring a shift in production to the Taiwanese firm TSMC. Now customers are knocking down TSMC’s door trying to get chips, and the company is working around the clock along with other suppliers trying to get them out. It doesn’t take much imagination, though, to understand how this would be avoided if the Chinese production was proceeding unimpeded.
“SMIC executives acknowledged that the U.S. move has prevented it from using its full capacity when it said geopolitical factors would prevent it from seizing ‘this year’s rare market opportunity,’ referring to the chip shortage,” wrote Kif Leswing Feb. 10.
Regardless of how we got to this point, it’s clearly requiring some dedicated planning to solve the semiconductor shortage, and officials are hoping today’s action works. Look for the effect in the tech markets.