Biden Set To Sign Executive Order To Address Chip Shortages, Supply-Chain Crisis: WSJ

President Joe Biden is close to signing an executive order reviewing supply chains for critical materials, including semiconductors to pharmaceuticals and rare-earth minerals, the Wall Street Journal reports.
The global semiconductor chip crisis has compelled U.S. automakers, including Ford Motor Co (NYSE: F) and General Motors Co (NYSE: GM) and other manufacturers, to opt for production holidays.
Recently a group of U.S. chip companies, including Intel Corp (NASDAQ: INTC), Qualcomm Inc (NASDAQ: QCOM), Micron Technology Inc (NASDAQ: MU), and Advanced Micro Devices Inc (NASDAQ: AMD), sought Biden’s assistance to solve the crisis.
Biden is slated to meet with a bilateral group of House and Senate lawmakers to discuss the pandemic-induced supply-chain issues.
The executive order is estimated to seek a 100-day supply chain review in four areas, including semiconductors used in products from cars to phones, large-capacity batteries for electric vehicles, pharmaceuticals, and vital rare-earth elements for technology and defense.
Interestingly, China rules the rare-earths market and is a major player in multiple supply areas, including pharmaceuticals. The order is timed when the U.S. intends to forge ties with different supplier countries and shun relations with China.
Major U.S. semiconductor companies have outsourced their chip production to Taiwan Semiconductor Manufacturing (NYSE: TSM) and Samsung Electronics Co Ltd (OTC: SSNLF). Samsung has been assured federal incentives in return for a factory in New York. TSM recently disclosed plans for a $12 billion chip plant in Arizona to come online by 2024.
The order is estimated to seek a one-year review of supply chains encompassing six sectors, from technology to food production.
The order will be focused on domestic production with incentives including job-training programs and business loans, including the federal procurement process for more American-made purchases. It will also include certain import limitations.
The Defense Production Act, covering vaccine production, could also be a part of the order. The government is expected to focus on public-private partnerships while improving relations with allies to address common supply vulnerabilities, including semiconductors.
The executive order will be linked to Biden’s plans towards U.S. job creation, mainly in the manufacturing sector that has faced intense foreign competition.
The long-term executive order is expected to incorporate the short-term chip crisis.
On Monday, Taiwan’s Economic Minister Wang Mei-Hua acknowledged receipt of a letter from the White House on the global shortage of auto chips and assured a resolution.
Image Courtesy: Wikimedia

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