Comprehensive semiconductor supply chain review planned by US government
Following nearly six months of profound availability constraints, the US government is about to assess semiconductor, battery, and rare earth metal supply chains for inefficiencies and national security concerns.
Credit: The White House
The assessment will analyze the "resiliency and capacity of the American manufacturing supply chains and defense industrial base" to support areas like national security and emergency preparedness, according to a draft executive order seen by CNBC. The review will be carried out by Biden's economic and national security teams.
According to the draft order, the Biden Administration plans to review gaps in domestic manufacturing and supply chains that are currently dominated or rely on "nations that are or are likely to become unfriendly or unstable."
The executive order is being finalized, and the White House could change the actual text of it by the time it's implemented.
The review will take place in two parts. The first phase will comprise a 100-day review of supply chains for high-priority items like semiconductors, batteries, and medical supplies. The second phase will broaden the review to sectors, including public health, energy, and transportation.
A year after the order is issued, the team will submit an analysis and recommendations on potential actions to take. Those could include trade route edits or diplomatic agreements.
Analysts expect relations with China to normalize under President Biden. That's after a four-year trade war between China and the U.S. that was marked by tariffs and export bans.
Although the executive order doesn't specifically mention China, President Biden said that his administration was readying itself for "extreme competition" with the country. The order would be one of Biden's first tangible efforts to shore up both American economic and defense interests.
Meanwhile, Apple is reportedly in the midst of diversifying its supply chain and moving some of its manufacturing outside of China. The Cupertino tech giant's supply chain and production processes are highly dependent on China, an issue underscored by the pandemic.
Credit: The White House
The assessment will analyze the "resiliency and capacity of the American manufacturing supply chains and defense industrial base" to support areas like national security and emergency preparedness, according to a draft executive order seen by CNBC. The review will be carried out by Biden's economic and national security teams.
According to the draft order, the Biden Administration plans to review gaps in domestic manufacturing and supply chains that are currently dominated or rely on "nations that are or are likely to become unfriendly or unstable."
The executive order is being finalized, and the White House could change the actual text of it by the time it's implemented.
The review will take place in two parts. The first phase will comprise a 100-day review of supply chains for high-priority items like semiconductors, batteries, and medical supplies. The second phase will broaden the review to sectors, including public health, energy, and transportation.
A year after the order is issued, the team will submit an analysis and recommendations on potential actions to take. Those could include trade route edits or diplomatic agreements.
Analysts expect relations with China to normalize under President Biden. That's after a four-year trade war between China and the U.S. that was marked by tariffs and export bans.
Although the executive order doesn't specifically mention China, President Biden said that his administration was readying itself for "extreme competition" with the country. The order would be one of Biden's first tangible efforts to shore up both American economic and defense interests.
Meanwhile, Apple is reportedly in the midst of diversifying its supply chain and moving some of its manufacturing outside of China. The Cupertino tech giant's supply chain and production processes are highly dependent on China, an issue underscored by the pandemic.
Comments
The problem now is the fact the government is just walking up and realizing their supplier can not get chips to make military equipment. Even if the chips are made in the US much of the raw materials to make chips come out of China. Then add in the fact many of the shipping companies took container ship off line to maintenance and repair during what they though was going to be decrease demand time.
Let just hope the government does not create more problem so the problem gets worse.
The creepy uncle that didn't understand anything that wasn't trying to shove cash in his pocket, has left the building...
So transparent. And it never changes.
I read that US rare earth mine will send the material to China to process and ship it back to US. Because it is cheaper and much less pollution.
Traditionally, democrat give more hard time to communist countries. It was Nixon who visited China back in the days. That is why China want trump to be elected in the first place. And don’t forget trump is Putin’s puppet.
Long story short - at some point in the early 90s, which was coincident with the end of the cold war, the engineers and military tacticians were beaten down a notch or two by accountants and politicians and more parts of key military systems were moved to commercial off-the-shelf components. I was part of that transition and I know the cost, performance, and footprint improvements were substantial. Why not harvest someone else's R&D? To be clear, it's not an all or nothing switchover, and accommodations were made to deal with the risks, such as better modularity, but like everyone knew there would be trade-offs, and in classical form the tradeoffs pitted immediacy and short term benefits against longer term considerations and risks. In commercial and financial markets we'd call this "short term thinking." In military systems acquisition we'd call this "short term thinking." Notice a common theme?
The loss of organic/domestic production and manufacturing capabilities in key semiconductor, battery, materials, components, etc., is largely rooted in this same short term thinking approach that rewards managers at all levels for delivering bottom line results this quarter, under their watch, while kicking the can down the road on possible longer term consequences of their short term actions. I know it sounds too obvious, but we've bought into the short term thinking and instant gratification at so many levels that we don't even see what's so clearly in front of our faces at all times. We're not alone, and nobody, not even China, is forcing us to stay on this path. All we can really do is deal with the consequences, which sadly, usually don't amount to much more than increasing the mortgage principle on our failures. We just kick the can and hope our children and grandchildren can figure out what to on their watch, long after we're gone.
In terms of policy, the damage went far beyond the semiconductor industry itself. The worst thing is that the real impact won't be felt for a few years. The trigger has been pulled. Now it's only a question of time.
https://www.piie.com/blogs/trade-and-investment-policy-watch/how-trumps-export-curbs-semiconductors-and-equipment-hurt-us
Any proposals would require years of planning and development and would entail costs that the private sector would not be able to make viable.
The only solution would be for huge government subsidies and direct government control (for national security reasons).
Doors to business opportunities overseas are already being slowly closed due to Trump's cowboy antics but also because most foreign powers with the capacity for semiconductor independence were already moving ahead with freeing themselves of US dependence, and long before Trump reached office.
In fact, it was given as the main reason for the EU processor initiative.