President Biden's “American Jobs Plan,” a sweeping $2 trillion infrastructure package unveiled in March, also includes new funding to build up domestic chip manufacturing capacity. Credit: iStockphoto.

As the looming semiconductor shortage cripples US automakers and threatens national security, President Joe Biden convened a virtual emergency summit with 19 CEOs and his top advisers, to discuss a solution to the expanding crisis.

According to a report by NPR online, Biden, national security adviser Jake Sullivan, National Economic Council Director Brian Deese and Commerce Secretary Gina Raimondo gathered the broad range of CEOs to discuss the semiconductor shortage, a key component of many computerized electronics.

The increased demand, as well as the disruption to steady supply chains that the pandemic brought into focus over the past year, has led to a renewed push by the White House, lawmakers from both parties, and industrial leaders to build up domestic chip manufacturing.

Speaking to the 19 CEOs during the portion of the meeting that was open to the press, Biden voiced support for legislation speeding up that transition, NPR reported.

“China and the rest of the world is not waiting, and there’s no reason why Americans should wait,” Biden said.

“We’re investing aggressively in areas like semiconductors and batteries — that’s what they’re doing … so must we,” the president said.

Calling chips and wafers “infrastructure of today,” Biden vowed to work with business leaders and lawmakers of both parties to pass the American Jobs Plan — the US$2.3 trillion infrastructure bill he unveiled in late March, Nikkei Asia reported.

The sweeping spending plan includes $50 billion — a third more than the $37 billion figure Biden initially pushed for — earmarked for the US semiconductor industry as part of the CHIPS for America program.

“We led the world in the middle of the 20th century. We led the world toward the end of the century, we’re going to lead the world again,” he continued.

“These chips, these wafers — batteries, broadband — it’s all infrastructure. This is infrastructure,” Biden said.

General Motors and Ford alone have warned that they could take a collective US$4.5 billion hit to their earnings this year because of the parts shortage, NBC reported.

“General Motors is grateful for the Biden Administration’s support of this critical issue impacting the global auto industry,” the automaker said in a statement, adding that it “look(s) forward to continuing to work with the Administration and members of Congress to address the global shortage.”

General Motors employees work on the assembly line at Fairfax Assembly & Stamping Plant in Kansas City, Kansas. Analysts predict the auto industry will lose $61 billion this year because of the semiconductor shortage. Credit: Jim Barcus for GM.

Consumers are also feeling the heat.

Vehicle prices that were already on the rise have surged even more sharply as automakers and dealers cut back on incentives, NBC reported.

Finding the car or truck of choice can be a challenge with dealer inventories down by about 1 million vehicles, compared to what is normal this time of year, said J.D. Power market research firm.

Many congressional Republicans have criticized Biden’s proposal as too broad and only loosely tied to traditional infrastructure proposals like rebuilding roads and bridges, NPR reported.

While the American Jobs Plan does not appear to have any support yet from Republican lawmakers, Biden pointed out the push for more domestic semiconductor manufacturing is bipartisan.

In February, he also set into motion a 100-day review of supply chain issues covering semiconductors, as well as advanced batteries, pharmaceuticals and other critical goods.

“This is an issue that has broad support in the United States Congress,” Biden said.

The semiconductor shortage touches nearly every industry, but US automakers have been especially hit hard, NPR reported.

General Motors, Ford and Stellantis (formed by a merger involving Fiat Chrysler) have all temporarily closed down auto plants as the companies wait for more supplies of the parts needed for increasingly computerized cars.

AlixPartners’ analysis predicts the auto industry will lose US$61 billion this year because of the shortage.

The heads of 19 companies, including Taiwan Semiconductor Manufacturing Co., Samsung’s Device Solutions Division, Intel, Medtronic and Micron, are among the attendees of the CEO Summit on Semiconductor and Supply Chain Resilience, Nikkei Asia reported.

Chief executives of Google’s parent Alphabet, Dell, HP, and AT&T Communications, as well as auto makers General Motors and Ford Motor — which have been hit particularly hard by the global chip shortage — were also present.

“We led the world in the middle of the 20th century. We led the world toward the end of the century, we’re going to lead the world again,” Biden said.

“This is a moment for American strength and American unity for government, industry, communities to work together to make sure that we’re ready to meet the global competition that lies ahead, not continue to slide.”

Commenting on the event, TSMC said it “applauds President Biden’s bipartisan efforts and leadership” on chips and expects the CHIPS for America program to benefit the semiconductor industry as a whole, Nikkei Asia reported.

“The President’s thoughtful remarks confirm a rising tide of U.S. government investment will lift all semiconductor boats,” said Peter Cleveland, TSMC Vice President of Global Government Affairs.

Senate Majority Leader Chuck Schumer, a Democrat from New York, is separately leading a push for $110 billion in federal funding to support research and development including in semiconductor-related fields, as part of the Endless Frontier Act.

The bill, on which a Senate legislative hearing will be held this week, would create a new technology directorate at the National Science Foundation to bankroll and facilitate cutting-edge technological innovation in the US.

Daleep Singh, a deputy national security adviser and deputy director of the National Economic Council, told NPR that the Biden administration sees the shortage as a much broader national security problem.

“Semiconductors are critical for most of the emerging technologies you could list,” he said.

“They’re civilian and military in their purpose. Pharmaceuticals, space, but also weapons systems and their satellites.

“So here’s the problem: Today 100% — all of the most advanced semiconductors are produced in East Asia, and more than 90% by one company. That’s a critical vulnerability.”

Sources: NPR, Nikkei Asia, NBC News, The Detroit News