The Biden administration is setting the stage for the US to invest in the domestic chip manufacturing industry over fears the country is becoming too reliant on foreign suppliers.
On Wednesday, President Biden will sign an executive order to help the US create a “more resilient and secure supply chain."
As Politico first reported, the order calls on the White House to review vulnerabilities in the supply chain in four areas: semiconductors, batteries for electric cars, rare earth minerals, and pharmaceutical-related manufacturing. During the 100-day review, the Biden administration will come up with recommendations that the president and Congress can take to address supply chain weaknesses.
One goal of the executive order is to ensure the US never again faces a shortage of essential products, including surgical masks and semiconductors. For example, the US auto industry has struggled recently to secure enough computer chips needed to build new cars.
The other goal is to maintain the US’s competitive edge. "The United States is the birthplace of this technology, and has always been a leader in semiconductor development," the White House says in a fact sheet about the EO. "However, over the years we have underinvested in production—hurting our innovative edge—while other countries have learned from our example and increased their investments in the industry."
The statement is likely a reference to South Korea, Taiwan, and China fostering their own chip manufacturing industries. Taiwan’s TSMC and Korea’s Samsung—which build processors for Apple, AMD, and Nvidia—now rank as the two largest contract semiconductor producers in the world, according to research firm TrendForce.
As for the US, the country still has Intel, which manufactures its own chips in states including Arizona, New Mexico, and Oregon. However, the company’s leadership in microprocessors is facing serious challenges amid repeated delays to manufacturing technology upgrades.
The US tech industry is also concerned the country is losing a competitive edge to Asia. Earlier this month, a trade group that represents Intel, AMD, and Nvidia called on the Biden administration to boost federal funding to domestic chip manufacturing and research in the US.
The fact sheet for Biden's executive order suggests the administration will try to facilitate additional funding for domestic chip manufacturing. “The task of making our supply chains more secure can also be a source of well paid jobs for communities across our country, including in communities of color, and steps will be taken to ensure that the benefits of this work flow to all Americans," it says.
However, other media outlets point out the upcoming supply chain review may also entail US partnerships with allies in Asia, including Taiwan, South Korea, and Japan. The financial newspaper Nikkei Asia describes the executive order as the Biden administration trying to create a supply chain free from Chinese influence amid ongoing tensions with Beijing on trade and state-sponsored hacking.
In the meantime, both TSMC and Samsung are working to build new chip factories in the US.