Biden orders sweeping supply chain review amid chip shortages

Posted on 26 Feb 2021 by James Devonshire

President Biden looks to tackle semiconductor chip shortages and shore up supply chains with a new executive order

President Joe Biden signed an executive order on Wednesday directing a sweeping review of the global supply chains used for critical materials -- from semiconductors to rare-earth minerals and pharmaceuticals -- in an effort to increase domestic production and avoid further shortages amid the COVID-19 pandemic.

American and global automakers, as well as other manufacturers, have had to cut production in the face of a growing shortage of semiconductor chips. Supplies began drying up shortly after the coronavirus pandemic hit last year. The Biden administration has been working with industry to free up supplies.

Semiconductors — often referred to as simply ‘chips’ — are used in numerous vehicle systems, including automatic braking, engine management, and assisted driving.

The executive order calls for a 100-day review of supply chains to assess vulnerabilities and areas for improvement for four areas: semiconductor chips, pharmaceuticals, rare earth minerals, and large-capacity batteries.

China is a key supplier for many of these critical materials. However, US officials said the review was not aimed at China. They said the US Government was interested in increasing domestic production and wanted to work with other countries for items that could not be made at home.

President Biden is also calling for a separate, one-year review of six broader sector supply chains including technology and food production.

“This is about making sure that the United States can meet every challenge we face in this new era,” Biden said, before signing the executive order at the White House. “The best way to do that is by protecting and sharpening America’s competitive edge by investing here at home.”

“The American people should never face shortages in the goods and services they rely on, whether that’s their car, their prescription medicines or the food at the local grocery store,” Mr. Biden said, at one point holding up a semiconductor. “We need to stop playing catch-up.”

While the executive order won’t immediately fix the semiconductor shortage, the hope is to produce a longer-term plan to help prevent future supply chain issues. The Biden administration is also currently looking for ways to ease the backlog facing US auto makers.

* Header image courtesy of Gage Skidmore, licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license.