How Are Governments Reacting to the Chip Shortage?

By Logan Wamsley

The global semiconductor and chip shortage has been an issue throughout the pandemic, and indeed was the focus of one of U.S. President Biden’s first executive orders. Such a focus appears to be continuing, as reports have emerged that the president has recently met with administration officials to discuss a potential bill to boost U.S semiconductor manufacturing.

According to Reuters, the meeting included Commerce Secretary Gina Raimondo, Director of National Intelligence Avril Haines, Deputy Defense Secretary Kathleen Hicks, as well as all U.S. senators.

“[The bill] has to pass now,” Raimondo said in a recent interview with ABC News. “Not in six months from now, (but) now. It’s bipartisan.” According to her, the bill would help “bring down the prices of chips, which will bring down the price of pretty much everything you buy, because everything includes chips.”

Such talks are not new. Last June, the Senate passed a $52 billion bill for chip subsidies, as well as $200 billion to boost domestic technological innovation in this sector in a bid to compete with China long term. The House passed a similar 3,000-page version, which includes several trade proposals.

Without additional aid, says some experts, the chip shortage is expected to last until the end of 2023, if not longer. The industry experiencing the most disruption remains the auto industry both in the U.S. and Europe.

“Europe has had a tough 2022 with semiconductors, wiring harnesses, and various other supply chain disruptions hampering production throughout the continent,” said Sam Fiorani, AFS vice president of global vehicle forecasting, told Automotive News in an email. The U.S. meanwhile, has seen total sales drop over 21% in Q2 2022 compared to the same time last year, largely due to production cuts — even as consumer demand remains strong. General Motors has gone as far as continuing production of over 95,000 incomplete vehicles with the intention of finishing them by the end of the year.