White House ramps up effort to tackle automotive chip shortage

18 February 2021 - 08:49 By Reuters
The White House is ramping up efforts to help the US car industry fight a growing shortage of semiconductor chips that has forced production cuts worldwide.
The White House is ramping up efforts to help the US car industry fight a growing shortage of semiconductor chips that has forced production cuts worldwide.
Image: 4itolino / 123rf

Top economic and national security officials in the White House have ramped up efforts to help the US auto industry fight a growing shortage of semiconductor chips that has forced production cuts worldwide, a White House spokesperson said.

The administration of President Joe Biden has held meetings with automotive companies and suppliers to identify chokepoints and urged companies to work cooperatively to tackle the shortage, the spokesperson said on Wednesday.

The White House has also tasked US embassies with identifying how foreign countries and companies that produce chips can help resolve the global shortage and working with international partners and allies, urging them to deal with the current shortfall.

The effort includes outreach to Taiwan, home of key chip maker Taiwan Semiconductor Manufacturing Co Ltd (TSMC), to find ways to resolve the shortage.

In a February 17 letter, Biden's top economic adviser, Brian Deese, thanked Taiwan's economic affairs minister Wang Mei-hua for working to help to resolve the shortage in co-ordination with the island's manufacturers.

Along with Deese, White House national security adviser Jake Sullivan is involved in the effort, as are other senior aides.

This month, US officials held a meeting with Wang in which the US thanked Taiwan for help on resolving the auto chip shortage, she said.

The White House spokesperson said officials recognise steps must be taken to avoid future shortages, which is why the administration is launching a comprehensive review of critical supply chains to identify vulnerabilities and take steps like spurring increased US domestic production.

General Motors Co on February 9 said the global chip shortage could shave up to $2bn (roughly R29.3bn) from 2021 profits and extended production cuts at three North American plants. It also said it would partially build and later finish assembling vehicles at two other factories because of the chip shortage.

No. 2 US automaker Ford Motor Co warned this month the chip shortage could lead to a 10% to 20% loss in first-quarter production, resulting in a potential hit to operating earnings of $1bn to $2.5bn (roughly R14.6bn to R36.6bn). It had said it lost some production of its top-selling F-150 pickup truck.

A shortage of auto chips could affect nearly 1 million units of global light vehicle production in the first quarter, data firm IHS Markit said Tuesday, adding that it still expects most of the volume to be recovered in the remainder of 2021.

In a January 19 letter to Deese first reported by Reuters, the United Auto Workers union and auto trade groups asked the Biden administration to consider “urging major silicon wafer foundries to ramp up production of automotive grade wafers.”

The chip shortage has affected many other automakers, including Toyota Motor Corp, Volkswagen AG, Stellantis NV, Renault, Subaru, Nissan Motor, Honda Motor and Mazda Motor Co.


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