• Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Biden administration looks to ease auto-backed inflation with new semiconductor initiative

·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

The Biden administration will announce a new transparency initiative with semiconductor producers that attempts to address the global supply chain shortage driving up the prices of cars and other electronic goods.

Thursday's announcement marks the administration's first substantive action to address rising prices in the auto industry and other sectors that rely heavily on semiconductors since designating those chips as one of four critical supply chain bottlenecks earlier this spring.

White House economists had previously attributed roughly half of all current inflation to "transitory" semiconductor shortages, yet, production for cars, laptops, televisions, and a number of electronic goods were forced to a temporary halt in September over chip supply concerns.

The initiative will be rolled out at a virtual meeting led by Commerce Secretary Gina Raimondo and National Economic Council Director Brian Deese. A number of companies and industry groups are expected to attend, per senior administration officials, including Intel, Samsung, Apple, General Motors, Ford, Taiwan Semiconductor Manufacturing, Stellantis, Microsoft, AAI, SIA, Daimler, and more.

BIDEN'S INFLATION WOES PERSIST WITH STOPPAGES AT 'BIG THREE' AUTOMAKERS

According to one administration official, the group will address the "impact the delta variant has had on global semiconductor supply chains and the industry's progress towards improving transparency and trust across the supply chain of firms that both produce and consume chips."

Industry producers have pledged an estimated $75 billion to shore up long-term supply chain deficiencies, but the new transparency initiative will attempt to alleviate the current bottlenecks increasing order lead times and, in some cases, outright causing production stoppages.

A second senior administration official categorized the transparency initiative as an "early alert system" involving multiple countries, specifically in Southeast Asia, and private companies to monitor delta variant-related shutdowns, which the administration has identified as a major factor in the global chip shortages.

"The Biden administration has had our embassies and our ambassadors personally in key countries in Southeast Asia engage with semiconductor plants to make sure their COVID protocols and operations are up to par and to engage with local and national governments to make sure," the official continued. "Government can then enable plants to operate in a COVID safe manner and minimize the duration and extent of shutdown. We're going to be taking these efforts a step further and trying the foundation that we've laid with increased interagency coordination."

This initiative will be "voluntary" and "designed to protect proprietary and business-sensitive information," but officials stressed that they hope to have all industry producers and consumers take part.

"We hope that this is going to be the beginning of a broader push to get more transparency about supply and demand," one official added. "We hope the request for information is going to get a lot of responses. As we say, we have lots of tools available to try to get more information about supply and demand and resolve the shortage. At the end of the day, it's gonna be industry leading the way."

Industry experts tell the Washington Examiner that a lack of transparency among companies, which oftentimes are in direct competition with each other, is one of two major factors exacerbating the current chip shortages. The other factor is global shipping problems caused by the coronavirus pandemic.

Brian Markwalter, Consumer Technology Association's vice president of research and standards, said in an interview that the best way for governments to address the shortages is not direct intervention but instead by fostering increased cooperation between industry players.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

"All businesses like clarity," he explained. "So to the extent they can be clear and transparent and not try to dive in too deeply and directly facilitate things, that will help."

"Those are the main things, clarity and making sure that there aren't barriers to commerce, and just being transparent with them," Markwalter continued. "I think the industry itself has worked very closely, and probably that's the part that gets a little bit less attention. We see what the chip supply sides are doing. The companies themselves are also redesigning and adjusting, in some cases, pivoting to use different kinds of chips that are available. So, in any kind of buyer and seller relationship, you make adjustments, and that's happening."

Washington Examiner Videos

Tags: News, Joe Biden, Inflation, Auto Industry, Semiconductor, White House, Gina Raimondo, Brian Deese

Original Author: Christian Datoc

Original Location: Biden administration looks to ease auto-backed inflation with new semiconductor initiative

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting