Biden pushing for resilience of global chip supply chain

To discuss the global chip shortage that has roiled the automotive industry and technology firms, US President Joe Biden held a virtual meeting with a group of 19 executives from the technology, chip and automotive industries. During the so-called CEO Summit on Semiconductor and Supply Chain Resilience Biden expressed the US’ determination to “aggressively” invest in the semiconductor sector, ready to “lead the world again”.

The US government enacted the CHIPS for America Act program in the FY 2021 National Defense Authorization Act (NDAA), initiating a 100-day review of supply chains for semiconductors as well as advanced batteries. Additionally, Biden said that he will urge Congress to invest $50 billion in semiconductor manufacturing and research. A Senate legislative hearing will be held on the bill this Wednesday.

The US had previously highlighted the risks of overreliance on Asia, especially China. “China and the rest of the world is not waiting, and there’s no reason why Americans should wait”, Biden said underlining the plans to invest in semiconductors and other industries like batteries.

Experts suggest the US move may not only fix the current chips shortage but will also boost domestic industry, making the country one of the dominant players.

Asia’s dominance in global chip supply chain

The US has only 12% of the world’s semiconductor factory capacity in 2020 from 37% in 1990, data by the Semiconductor Industry Association suggested. More than 70% of the semiconductor manufacturing market are controlled by two Asian firms – Taiwan Semiconductor Manufacturing Co. (TSMC) and South Korea’s Samsung Electronics.

Executives of TSMC and Samsung’s Device Solutions Division also joined the summit. Peter Cleveland, TSMC Vice President of Global Government Affairs, expects the semiconductor industry to benefit as a whole from the US efforts. He said after the meeting: “The President’s thoughtful remarks confirm a rising tide of US government investment and will lift all semiconductor boats”. 

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A major reason for the ever-long U.S.-China tensions, the global chip shortage has led the US to draw major plans of heavy investment in leading-edge technology, for increasing its significance in the supply-chain geopolitics. US firms are integral for the equipment and machinery for semiconductors manufacturing but still fall behind in the semiconductor industry supply chain.

The summit comes days ahead of Biden’s Friday meeting with Japanese Prime Minister Yoshihide Suga in Washington, where the two allies plan to develop a secure supply chain for strategic components like semiconductors, as well as investing in future technologies.

Quick end for chip shortage problem?

The shortage of chips, which are critical to everything from cars to smartphones, has disrupted a wide array of industries. Factories shutting down in auto as well as consumer electronic sectors have implicated sudden flaws in the supply chain of the semiconductor industry. The situation became clearer this year with the rising competition between the auto and consumer electronics industry, amid the sprawling demand for chip supplies during the Covid-19 pandemic. 

While some analysts believe that there’s little that can be done in the short term to end the current problem, there is the possibility that the US’ strategic changes in manufacturing and investment in the semiconductors industry will play an integral role in the future global economy.