Biden to sign executive order addressing chip shortage

President Biden is planning to sign an executive order to address the shortage of semiconductors, or chips, an issue that industry has begged him to take action on recently.

White House press secretary Jen Psaki announced the pending order during the daily press briefing Thursday, noting that the order would be signed “in the coming weeks.”

“The administration is currently identifying potential chokepoints in the supply chain and actively working alongside key stakeholders in industry and with our trading partners to do more now,” Psaki told reporters. “At the same time, we are looking down the road, the long-standing issue with short supply of semiconductors … is one of the central motivations for the executive order the president will sign.”

Psaki noted that the executive order will involve the undertaking of a “comprehensive review of supply chains for critical goods.”

“The review will be focused on identifying the immediate actions we can take, from improving the physical production of those items in the U.S., to working with allies to develop a coordinated response to weaknesses and bottlenecks that are hurting American workers,” Psaki said. 

The announcement of the upcoming order comes amid a global chip supply shortage, hitting multiple industries hard, including the auto sector.

CNBC reported Thursday that this shortage will lead to a loss of more than $60 billion in revenue for the global automotive industry this year, with chips used in many areas of new vehicles including power steering and brakes.

The news from the Biden administration also came the same day the Semiconductor Industry Association — made up of leading chip groups including IBM, Qualcomm and Intel — sent a letter to Biden urging him to designate funds to increase research and manufacturing of semiconductors.

“Our share of global semiconductor manufacturing has steadily declined from 37 percent in 1990 to 12 percent today,” the companies wrote. “This is largely because the governments of our global competitors offer significant incentives and subsidies to attract new semiconductor manufacturing facilities, while the U.S. does not.”

“As a result, the U.S. is uncompetitive in attracting investments in new fab construction and our technology leadership is at risk in the race for preeminence in the technologies of the future, including artificial intelligence, 5G/6G, and quantum computing,” they wrote. 

The coalition asked that Biden include incentives for U.S. chip manufacturing and research as part of any major legislative package, such as his COVID-19 recovery plan or an upcoming infrastructure bill. 

“We believe bold action is needed to address the challenges we face. The costs of inaction are high,” the companies wrote. “We stand ready to work with you to achieve our shared goals.”

When questioned about whether the executive order would include language on incentives, Psaki said that she would wait to give any further details until Biden signed the order. 

Congress has already taken action on this front, with the most recent National Defense Authorization Act including language to help incentivize semiconductor research and manufacturing.

The Trump administration took steps to crack down on Chinese chip makers, last year restricting the ability of telecom giant Huawei to use American software or technology to manufacture chips.