The demand of semiconductor chip is likely to hit an all-time high this year, but with several predictions done by different chip making companies, it has become apparent that a shortage for these chips is on the horizon in near future.
Concerned with these predictions that has started affecting the manufacturers this year, the White House has decided to intervene and come up with a better resolution to tackle this issue.
The White House has declared that administration officials are working to address a growing shortage of semiconductor chips that have slowed auto production around the world.
White House Press secretary Jen Psaki said “the Biden administration is currently identifying potential chokepoints in the supply chain and actively working alongside key stakeholders in the industry and with our trading partners to do more now.”
A White House official who declined to be named because the person was not authorized to speak publicly told Reuters it “is in active conversation with all stakeholders – from auto companies to semiconductor firms, as well as congressional leaders and diplomatic partners – to see what actions can be taken to make sure American workers are not being negatively impacted by this shortage.”
The official added it is critical “to identify more durable solutions to addressing the long standing issues faced by the semiconductor industry and the end-users of these goods.”
In a Jan. 19 letter to Biden adviser Brian Deese first reported by Reuters, the United Auto Workers union and the heads of associations representing automakers, auto dealers and parts manufacturers asked the Biden administration to consider “urging major silicon wafer foundries to ramp up production of automotive-grade wafers.”
The letter added that the shortage would result “in a production loss of hundreds of thousands of vehicles, if not more, in the first quarter alone. These losses, combined with a larger expected economic impact in Q2 and Q3, require urgent action.”
The issue is one reason Biden plans to sign an executive order in the coming weeks to direct a comprehensive review of supply chain issues for critical goods.
General Motors on February 10 said the global semiconductor chip shortage could shave up to $2 billion from 2021 profit.
On February 9 this year, the largest U.S. automaker extended production cuts at three North American plants and said it would partially build and later finish assembling vehicles at two other factories due to the chip shortage.
U.S. rival Ford Motor previously said it lost some production of its high-profit, top-selling F-150 pickup truck and numerous other automakers have cut production in the United States and around the world.