Under Pressure, Biden Orders Review of U.S. Chip Supply Shortage
President Biden has signed an executive order to compel the federal government to conduct a 100-day review into semiconductor supply chains.
To address global chip shortages extending into 2021, various semiconductor industry firms recently reached out to President Biden with a letter urging Congress to help reinvigorate semiconductor manufacturing and research in the U.S.
A high-level graphic on the 2019 demand by end-use for semiconductors. Image used courtesy of SIA
It's difficult to play down the gravity of the chip shortage after reading the letter. The letter focuses on how the absence of U.S. chip manufacturing incentives has affected the country's competitiveness, highlighting America's declining share of global semiconductor manufacturing.
It then urges the Biden Administration to fund the CHIPS for America Act fully. This bipartisan legislation plans a package of grants and tax incentives to strengthen America's domestic semiconductor supply chain.
The Chips Are Down
The dire state of America’s domestic semiconductor supply chains has been put in the spotlight by the ongoing global chip shortage. And while offers of help from Taiwan Semiconductor Manufacturing Co. Ltd (TSMC) have been well-received, this supply chain disruption may be indicative of the U.S.' waning role as a foremost hub for semiconductor research and manufacturing.
A line graph showing the trend in the global regional semiconductor market. Here you can see America's leading point was in 2000. Image used courtesy of SIA
While it’s true that the U.S. still asserts a great deal of dominance over the industry by U.S. firms holding roughly half of the global semiconductor market share since the late 1980s, this is market hold may be dipping.
This line graph depicts the trend in semiconductor market shareholdings from 1988–2018. The bar graph shows the market shareholdings as of 2018. Image used courtesy of SIA
One place of concern is America's position in areas like memory, which South Korean firms like Samsung and SK Hynix are dominating. Contract manufacturing, the holy grail of the modern chip industry, enabled TSMC to take the crown of the world's biggest chip company. While Intel is still struggling with its shift to 7nm, Samsung is already at 5nm. Also, TSMC is expecting to move to 3nm (and beyond) as early as 2022.
To aid long-term technical viability and competitiveness for the U.S. semiconductor industry, the federal government will likely need to make significant investments, not only in terms of financial incentives and tax breaks but legislative efforts, too.
Biden Orders Review of Semiconductor Supply Chains
In response to the ongoing chip shortage and mounting pressure for the federal government to take action, President Biden signed an executive order (EO14017: America’s Supply Chains) on February 24th addressing the semiconductor industry’s growing concerns.
The order compels the federal government to conduct a 100-day review of supply chains in four sets of products, including computer chips and large-capacity batteries. The White House plans to look at the "resiliency and capacity" of the American manufacturing supply chains to support national security and emergency preparedness.
During a press conference, President Biden emphasized that addressing the chip shortage is necessary to ensure the United States meets challenges related to the pandemic, cybersecurity, and climate change. Biden suggested that the most effective way is to sharpen America's competitive edge by bringing investments back home.
President Biden during the press conference holding a microchip. Image used courtesy of Jonathan Ernst and Reuters
While the semiconductor shortage has undoubtedly played a part in shaping the order, Biden noted during his 2020 campaign that the U.S. needed new rules and processes to dictate trade relationships with other nations. This order may well be the first in a series of strategic moves to decrease U.S. dependence on foreign trade.
Biden would not have a clue about the semiconductor market. He’s not a businessman. He can barely hold his head up straight
He may not be a businessman but he has FAR better advisors that the criminal who previously held his office. And unlike him, Biden actually listens to and acts on advice from experts.