Source: REUTERS
U.S. Commerce Secretary Gina Raimondo said Thursday she held meetings with three dozen senior industry leaders on a semiconductor chip shortage and said the United States could help boost transparency in the market.
The meeting included General Motors Co (GM.N), Ford Motor Co (F.N), Stellantis NV (STLA.MI), chip suppliers and other users of chips.
Raimondo and the Biden administration back $50 billion in U.S. government spending to dramatically boost U.S. semiconductor production and research, but it will take significant time for that spending – if approved by Congress – to boost supply.
Asked if there was any action the Biden administration could take to address short-term auto production issues, Raimondo suggested it could help with demand forecasting and address a “lack of transparency” around the chips market and various sector needs.
“We are thinking about ways that we might be able to help with more information-sharing between suppliers and consumers,” Raimondo said.
“It may be that there is a role for the government to play, either in encouraging industry to do that or somehow helping to increase the transparency and information-sharing.”
The global semiconductor chip shortage will cost automakers $110 billion in lost revenue this year, up from a prior estimate of $61 billion, consulting firm AlixPartners said last week, as it forecast the crisis will hit the production of 3.9 million vehicles.
Last month, Ford warned the chip shortage might slash second-quarter production by half, costing it about $2.5 billion and about 1.1 million units of lost production in 2021. GM has extended production halts at several North American factories because of the shortage. Both continue to announce new production cuts.
GM said in a statement it was “grateful for the Biden Administration’s support of this critical issue impacting the global auto industry and applaud Secretary Raimondo’s continued focus on the matter.”
Reuters reported on May 5 the Biden administration had concerns about invoking the Defense Production Act, a 1950 law that allows the government to force companies to produce materials for national security reasons, quoting an official who said reallocating semiconductors to automakers “would result in fewer chips for others.”
Asked Thursday if the administration had ruled out that approach, Raimondo said “that’s a challenge because the shortage is affecting a large variety of industries”, not just autos but electronics, technology companies, and medical device companies as well.
“We want to do everything we can but I think that’s a challenge,” Raimondo added.
U.S. Senate Democratic Leader Chuck Schumer unveiled revised bipartisan legislation late Tuesday that includes $52 billion in emergency funding to significantly boost U.S. semiconductor chip production and research over five years as part of a larger bill, but lawmakers are still debating provisions especially whether it should require companies to pay prevailing wages.
U.S. Senate Democratic Leader Chuck Schumer unveiled revised bipartisan legislation late Tuesday to approve $52 billion to significantly boost U.S. semiconductor chip production and research over five years.
The emergency funding proposal will be included in a more than 1,400-page revised bill the Senate is taking up this week, as first reported by Reuters on Friday, to spend $120 billion on basic U.S. and advanced technology research to better compete with China. read more
“American manufacturing has suffered rather dramatically from a chip shortage,” Schumer said. “We simply cannot rely on foreign processors for chips. This amendment will make sure that we don’t have to.”
The proposal includes $49.5 billion in emergency supplemental appropriations to fund the chip provisions that were included in this year’s National Defense Authorization Act, but which require a separate process to garner funding.
President Joe Biden has also called for $50 billion to boost semiconductor production and research.
Supporters of funding note the U.S. had a 37% share of semiconductors and microelectronics production in 1990; today just 12% of semiconductors are manufactured in the United States.
“There is an urgent need for our economic and national security to provide funding to swiftly implement these critical programs. The Chinese Communist Party is aggressively investing over $150 billion in semiconductor manufacturing so they can control this key technology,” a bill summary released Tuesday said.
The measure would “support the rapid implementation of the semiconductor provisions” in the defense bill.
As reported by Reuters, the bill includes $39 billion in production and R&D incentives and $10.5 billion to implement programs including the National Semiconductor Technology Center, National Advanced Packaging Manufacturing Program and other R&D programs.
Last month, Ford Motor (F.N) warned the chip shortage might slash its second-quarter production by half, costing it about $2.5 billion and about 1.1 million units of lost production in 2021, while General Motors (GM.N) has extended production halts at several North American factories because of the shortage.
The bill also includes $1.5 billion in emergency funding to help boost Western-based alternatives to Chinese equipment providers Huawei Technologies (HWT.UL) and ZTE Corp (000063.SZ), aiming to accelerate development of an open-architecture model (known as OpenRAN) backed by U.S. carriers.
Another provision prohibits the Chinese-owned social media app TikTok from being downloaded to government devices “to better safeguard the privacy and security of Americans.”
Schumer said the U.S. must address the rising threat from China on many fronts, notably the technology race. “If we don’t step up in a big and bold way, we risk missing out on a generation of good-paying jobs, millions and millions of them,” he said.
(Written by David Shepardson. Published on May 21, 2021)
This content is for informational purposes only and should not be construed in any other way. The content is based on sources that InMaketsWeTrust.com believes to be reliable but are not guaranteed by us as accurate and does not purport to be a complete statement or summary of the available data. We encourage readers to supplement the information obtained from this content with independent research and other professional advice. InMaketsWeTrust.com is not responsible for errors and omissions and does not guarantee nor endorse any information published on this curated content. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of InMaketsWeTrust.com.
