Biden to order semiconductor supply chain review
The key U.S. supply chains will have a new review under the Biden administration. President Joe Biden ordered the administration to review not only semiconductor supply chains but also rare earth materials. Electric vehicle batteries, nitrile gloves, etc. Medical supplies like nitrile gloves have already been implemented under the new invoke act. Rare earth materials will help manufacture and ramp up production domestically. The review also mentioned supply chain that comes through other countries that may soon become unfriendly or unstable, will also be reviewed; “nations that are or are likely to become unfriendly or unstable” to be exact.
Why the shortage?
There is a global shortage of semiconductor supply. Initially it was thought to be due to the vast demand for them in computers, phones and other smart devices. A year ago we could do most of our tasks in the office. But since the pandemic, many people are now sitting at home and working remotely. Upgrading computers for office use, gaming and streaming will always benefit with the next great component. And this caused a huge spike in the market. The executive order took place on Wednesday by President Biden. Production of electrical goods that require semiconductors, like automobiles and smartphones, is far behind supply.
Production of chips fell in short supply for the same reason. The pandemic! Factories and offices closed. This resulted in a lower supply of the product manufacture. On the other hand, the need for electrical devices like laptops and computers spiked to an all-time high. Transportation of these gadgets also slowed down, hence the price of these devices has also gone up. There is a surge in cryptocurrency and the GPU market on the higher tier side also took a hit. Resulting in the general population not getting their next-gen GPU - as low supply and price increase.
US market has one of the biggest customer bases of tech around the world and the chip shortage is causing automakers to postpone production. The lack of chip and battery components is triggering the market and it called for the higher authority to take action ASAP. The assessment will analyse the “resiliency and capacity of the American manufacturing supply chains and defence industrial base to support national security [and] emergency preparedness.”
The White House didn’t necessarily mean China, but it was a part of the direct assessment to be held in the venture. It is one of the first administrative tangible efforts that noticed that the market shall not stay the way it is currently and things need to be changed. Much needed materials will be in the need of direct supply and not halted by other countries through distributions. There will be two phases of this assessment. The first one will have a 100-day review process which will help monitor and analyse the market of high-priority chains. And the second one is the review. It will start after the analysing period and give results to take action. Production of defence, energy and transportation equipment will be monitored thoroughly. Public health equipment will also be included in the action.
Managing director at Benchmark Mineral Intelligence (BMI) said “If lithium is anything to go by, China would stop short of weaponising rare earth (blocking exports to the US) favouring the economic route of exporting its processing knowhow to new mines around the world” in a tweet.