US President Joe Biden will sign an executive order on Wednesday aimed at addressing a global semiconductor chip shortage that has cut car production and alarmed the White House and members of Congress.
Biden will meet a bipartisan group of lawmakers to discuss the scarcity, which has been exacerbated by the pandemic.
Administration officials said Biden’s executive order will launch an immediate 100-day review of supply chains for four critical products: semiconductor chips, large-capacity batteries for electric vehicles, rare earth minerals and pharmaceuticals.
The order will also direct six reviews to focus on the areas of defence, public health, communications technology, transportation, energy and food production.
The United States has been besieged by supply shortages since the onset of the pandemic, which squeezed the availability of masks, gloves and other personal protective equipment, hurting frontline workers.
The chip shortage, which in some cases is forcing automakers to take employees off production lines, is the latest example of supply bottlenecks.
Ford Motor Co recently said a lack of chips could cut the company’s production by up to 20 per cent in the first quarter while General Motors said it was forced to cut output at factories in the United States, Canada and Mexico and would reassess its production plans in mid-March.
US semiconductor firms account for 47 per cent of global chip sales but only 12 per cent of production, because they have outsourced much of the manufacturing overseas, according to the Semiconductor Industry Association. In 1990, the US accounted for 37 per cent of global semiconductor production.
Biden has been under pressure from Republican lawmakers to do more to protect American supply chains from China by investing in domestic manufacturing of next-generation semiconductor chips.
“I strongly urge the Biden administration to prioritise protecting emerging and critical technologies, like semiconductors, from the grasp of the CCP (Chinese Communist Party),” said US Representative Michael McCaul, in a recent letter to the White House from Republicans on the House of Representatives Foreign Affairs Committee.
Under Biden’s order, the White House will look to diversify the United States’ supply chain dependence for specific products such as rare earth minerals from China.
It will look to develop some of that production in the United States and partner with other countries in Asia and Latin America when it cannot produce such products at home, the official said.
The supply chain executive order will add to Biden’s vow in January to leverage the purchasing power of the US government, the world’s biggest single buyer of goods and services, to strengthen domestic manufacturing and create markets for new technologies.