Biden Focused on Chips; Short-Term Supply Fix Unlikely
There’s no easy or quick solution to chip shortages, and the administration is doing all it can, National Security Council Senior Director-International Economics and Competitiveness Peter Harrell told an AT&T webinar Tuesday. The FCC sought comment last week (see 2105120024). An executive warned the shortage affects smartphones, IoT devices, network equipment and other carrier gear. Harrell said the administration supports legislation to provide money for domestic chip manufacturing (see 2105170059). The administration is also trying to increase supply chain transparency, he said.
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Early problems were mostly felt in automotive manufacturing, but they’re now affecting consumer electronics, communications and other sectors, Harrell said. The chips in short supply aren’t necessarily the most advanced ones but are “feature-rich” chips used by numerous industries, he said. Harrell partly blames “unexpected events,” including a fire at a major semiconductor manufacturing facility in Japan and February storms in Texas that temporarily shuttered plants. The COVID-19 pandemic caused major changes in demand, especially for CE, he said. It takes months to retool production lines, he said. The U.S. “underinvested in chip production” over years and the nation’s share of the market fell from more than a third to 12% he said: Increasing U.S. production is “the long-term solution,” as “chip plants can't be built overnight.”
There's “bipartisan support” for the Chips for America Act, and it’s unclear whether it will be rolled into the Endless Frontier Act (S-1260), said Claire Sanderson, aide to Sen. John Cornyn, R-Texas. “That’s a question that lots and lots of folks … are asking.” There’s a “bracketed placeholder” in the manager’s substitute EFA amendment, which requires consensus, she said. “I can’t commit that there will be anything.”
The communications sector accounts for about 50% of semiconductor sales, said Susan Johnson, AT&T executive vice president-global connections and supply chain. “Unlike many of the other supply chain challenges we've been through, this shortage we're seeing today appears to be more structural and much longer term in nature.” Chipsets “are foundational to connectivity and the remote working and learning” of COVID-19, said Joan Marsh, executive vice president-federal regulatory relations.
The supply gap “has been a long time coming,” said Tom Quillin, Intel vice president-global security policy. Production was “severely strained before the pandemic, and the pandemic certainly exacerbated things,” he said. For the U.S. to compete, “we need to make strategic investments in semiconductor technology and manufacturing.”