Within hours of each other, the US administration of President Joe Biden and the European Commission both published their response to the current semiconductor shortage with remarkably similar backing.
Both talk strongly of strategic supply chains and sovereignty. Both are putting billions in cash behind the plans. Both will take years and are no quick fix.
It wasn’t Covid-19 pandemic itself that created the crisis, but rather the response of the automotive industry. Cancelling chip contracts in Taiwan in 2020 and expecting instant recovery in 2021 showed a fundamental lack of knowledge about how the semiconductor industry works. Rather, it showed the importance of the industry to many other sectors, and how reliant, and therefore vulnerable, the major economies had become.
The European plans had been in preparation for a while, but more focussed on the battery supply chain. Biden’s were top of the agenda when he took over on January 20th.
The US Executive Order published on Wednesday highlighted the strategic nature of the challenge, and the huge risks involved, highlighted by analyst Malcom Penn.
“The bottom line is simple: The American people should never face shortages in the goods and services they rely on, whether that’s their car or their prescription medicines or the food at the local grocery store,” said Biden while signing the Executive Order.
“We need to make sure these supply chains are secure and reliable. I’m directing senior officials in my administration to work with industrial leaders to identify solutions to this semiconductor shortfall and work very hard with the House and Senate. They’ve authorized the bill, but they need $37bn, short term, to make sure we have this capacity,” he said.
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