A global shortage of computer chips has restricted the global production of goods from iPhones to Sony PlayStations to Ford trucks. President Biden has asked Congress for $ 37 billion to boost US semiconductor manufacturing, but government industrial policies are not required to address this supply and demand problem.
A new regulation provides for a 100-day review of the supply chain for semiconductors and three other “critical” products, including batteries for electric cars. “Resilient, diverse, and secure supply chains will help revitalize our domestic manufacturing capabilities and create well-paying jobs, not $ 15 an hour – which we have to do one day,” said Biden.
Safe and resilient supply chains are important, but the president is trying to capitalize on domestic manufacturing problems to fuel industrial policy, as Donald Trump did with steel and aluminum tariffs.
The economic rationale behind Mr. Biden’s order is a chip shortage that has shut down auto plants in the US and abroad. Cars have become like smartphones on wheels and can contain thousands of chips – electric vehicles even more. IHS Markit recently forecast the shortage will affect global production of one million vehicles in the first quarter.
Governments helped tackle the chip shortage, starting with their lockdowns last spring. Automakers cut orders for new chips as car purchases fell. They didn’t expect the demand for automobiles to recover, fueled by trillions of dollars in government spending and near zero interest rates. Germany and China also increased subsidies for electric vehicles.