President Joe Biden on Wednesday signed an executive order to review the supply chains that provide the U.S. with critical products such as semiconductors.
The move comes as companies including automakers face a shortage in chips they need for their products.
The executive order is part of the Biden administration’s strategy to create more resilient and secure supply chains for critical goods. The order calls for two separate reviews. The first, which is set to last 100 days, will seek to identify risks in supply chains across four key areas: pharmaceuticals, semiconductors and advanced packaging, critical minerals such as rare earth elements and large-capacity batteries such as those used in electric vehicles.
The second review will take a more in-depth look at important supply chains. It will be carried out over a year and cover a broader set of areas than the first, namely defense, healthcare, information and communications technology, the energy sector and transportation, as well as agricultural commodities and food production. As with the first review, one of the key priorities will be to identify supply chain risks that could make it difficult to access key goods.
The officials involved in the review will also be tasked with putting together recommendations on how to address risks they identify. The executive order specifies that “such recommendations may include sustainably reshoring supply chains and developing domestic supplies, cooperating with allies and partners to identify alternative supply chains, building redundancy into domestic supply chains” and other potential improvements.
During the signing of the executive order, President Biden said he would also push for $37 billion in funding to boost semiconductor manufacturing capacity. Companies in the auto sector and other areas are currently facing a shortage of chips that is forcing them to slow production. According to Reuters, Ford Motor Co. has warned that it may have to cut output by a fifth during the first quarter, while General Motors Co. has already had to lower the pace of manufacturing at multiple factories.
The chip shortage is fueled partially by increased demand for consumer electronics. Research firm Gartner Inc. estimates that sales of personal computers jumped 4.8%, to 275 million units, in 2020, reversing years of declining shipments. Qualcomm Inc., a major supplier of processors for smartphones, stated last month that there’s a shortage not only in chips made using the latest manufacturing techniques but also in products based on legacy processes.
Photo: Unsplash
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