Core stuff (public number: aichip001)
Compile the | Sing
Edit | Wen Shu
According to Reuters reported yesterday, a senior U.S. government official said that if the U.S. government uses the Defense Production Act to allocate scarce chip production capacity to the automotive industry, it may harm the interests of suppliers of laptops, pacemakers and other products.
Currently, many automakers are forced to stop production or cut production due to a global semiconductor shortage. To this end, many automakers and some U.S. members of Congress have called on the White House to adopt the Defense Production Act of 1950 to guarantee its chip supply. Some analysts suggest that the White House may refuse to use this move.
<h2>First, the priority distribution of automotive chips may become a "nightmare" for the supply chain</h2>
The U.S. Defense Production Act, created in 1950 in the Wakeboard War, allows presidents to require civilian companies to provide critical materials for defense, expand production, prioritize defense contract orders, and so on. In addition, the act also authorizes the president to expropriate property and settle labor disputes in enterprises.
Previously, US President Biden had invoked the bill to increase the production capacity of new crown pneumonia virus protective equipment and required US pharmaceutical giant Merck to provide vaccine production equipment.
While the bill may alleviate the shortage of car chips, many U.S. government officials privately believe that invoking the bill on the supply of car chips is not feasible.
A U.S. government official told Reuters that redistributing chips to automakers could hurt suppliers of consumer electronics such as notebooks and medical devices such as pacemakers, a move that is "challenging in the short term."
People who know the White House in the United States commented that if the US government invokes the bill on automotive chips, it will be the worst nightmare for the chip supply chain; and for the United States, (invoking the bill) will also have terrible consequences.
According to Reuters, there is no final answer as to whether the U.S. government will invoke the Defense Production Act on the issue of automotive chips.
<h2>Second, Biden or the establishment of a new department to supervise local production capacity</h2>
Last week, Ford Motor Corp. warned that a chip shortage would reduce production by 50 percent in the second quarter. The current chip shortage has begun to threaten the U.S. economy and affect employment in campaign-focused areas such as Texas and Michigan.
The same U.S. government official told Reuters that the U.S. government plans to issue recommendations (for the chip industry) after completing Biden's 100-day supply chain review to "encourage U.S. chip production and increase chip production." This supply chain review includes areas such as semiconductors, high-capacity batteries, rare earth minerals and pharmaceuticals.
The administration added that the U.S. government is making there more transparency between chipmakers and end customers by more accurately predicting chip demand and providing chip supply chain information.
Today, Biden has asked the U.S. Congress to allocate $50 billion to support the domestic chip industry, and will also create a new department within the Department of Commerce to oversee U.S. domestic production capacity.
Delaware Sen. Chris Coons said he was pleased with the administration's actions so far. Coones had urged the U.S. government to adopt the Defense Production Act.
U.S. President Joe Biden
<h2>Third, the US government has used multiple means to avoid the chip crisis and has attracted some companies to build factories in the United States</h2>
According to the Association of the American Semiconductor Industry (SIA), in 1990, U.S. semiconductor manufacturing accounted for 37% of the global share, but now only about 12%, more than 80% of semiconductor manufacturing is concentrated in Asia.
The government official who revealed the news to Reuters mentioned that the US government has been demanding to strengthen local chip manufacturing capabilities. At the same time, the U.S. government is considering strengthening regulation and establishing multilateral agreements to avoid future chip crises.
Because of financial subsidies and tax incentives, some chipmakers plan to build more chip manufacturing plants in the United States, among which Taiwanese chip manufacturing giant TSMC will build six fabs in Arizona, USA.
But Chad Bown, a senior fellow at the Peterson Institute for International Economics, commented that there is no quick solution to the decline in U.S. chip manufacturing capacity.
<h2>Conclusion: The United States is difficult to reconstruct the semiconductor supply chain</h2>
With the rapid rise in demand for chips, the shortage has spread from automobiles to multiple industries such as consumer electronics, network equipment and home appliances, and its impact is gradually increasing. In fact, since the global chip shortage, the United States and European countries have wanted to improve their local chip manufacturing capabilities and ensure the security of their supply chains. However, the semiconductor industry chain has formed a vertical division of labor model such as design, manufacturing, and packaging for decades, and is scattered in various regions of the world.
If the United States wants to build its own semiconductor industry chain, it is not only economically uneconomical, but also requires huge capital investment, but also causes redundant supply and undermines the balance of the semiconductor market. TSMC and Dutch lithography machine supplier ASML have expressed their views that there are many problems with the idea that the United States wants to rebuild the semiconductor supply chain. It remains to be seen how the semiconductor market pattern will change in the future.
Source: Reuters