White House working to address semiconductor shortage hitting auto production

The White House said on Thursday that administration officials are working to address a shortage of semiconductor chips that has slowed auto production around the world.

White House press secretary Jen Psaki said the Biden administration is “currently identifying potential chokepoints in the supply chain and working alongside key stakeholders in industry and with our trading partners to do more now.”

The issue is one reason Biden plans to sign an executive order in the coming weeks to direct a comprehensive review of supply chain issues for critical goods.

General Motors Co on Wednesday said the global semiconductor chip shortage could shave up to $2bn (roughly R29,302,800,000) from 2021 profit. On Tuesday, the largest US automaker extended production cuts at three North American plants and said it would partially build and later finish assembling vehicles at two other factories due to the chip shortage.

US rival Ford Motor Co previously said it lost some production of its high-profit, top-selling F-150 pickup truck, and numerous other automakers have cut production in the US and around the world.

A White house official, who declined to be named because the person was not authorised to speak publicly, told Reuters it “is in active conversation with all stakeholders - from auto companies to semiconductor firms, as well as congressional leaders and diplomatic partners - to see what actions can be taken to make sure American workers are not being negatively impacted by this shortage.”

The official added it is critical “to identify more durable solutions to addressing the long-standing issues faced by the semiconductor industry and the end users of these goods”.

In a January 19 letter, the United Auto Workers union and the heads of associations representing automakers, auto dealers and parts manufacturers asked the Biden administration to consider “urging major silicon wafer foundries to ramp up production of automotive grade wafers”.

The letter added that the shortage would result “in production loss of hundreds of thousands of vehicles, if not more, in the first quarter alone. These losses, combined with a larger expected economic impact in Q2 and Q3, require urgent action.”