Washington — The CEOs of the Detroit Three and major tech companies met virtually with President Joe Biden and senior administration officials Monday to discuss the ongoing shortage of semiconductor chips, which has forced automakers to scale back production.
General Motors Co.’s Mary Barra, Ford Motor Co.’s Jim Farley and Stellantis NV’s Carlos Tavares were expected to make the case for setting aside a portion of chips for the auto sector, which uses “legacy” chips rather than the advanced chips used in electronics and which take up a small share of chips worldwide.
The CEOs of major tech companies such as Google, Dell, HP, Samsung and AT&T also attended, as did the CEOs of major chip producers including Intel, Taiwan Semiconductor Manufacturing Co., NXP and Global Foundries.
The president was scheduled to “briefly join” the meeting hosted by National Security Adviser Jake Sullivan, National Economic Council Director Brian Deese and Secretary of Commerce Gina Raimondo.
“I’ve been saying for some time now, China and the rest of the world is not waiting. And there’s no reason why Americans should wait. We’re investing aggressively in areas like semiconductors and batteries, that’s what they’re doing and others, so must we,” Biden said after the meeting Monday, according to pool reports.
He added: “This is a moment for American strength and American unity for government, industry, communities to work together to make sure that we’re ready to meet the global competition that lies ahead.”
Biden also said he received a letter Monday from a bipartisan group of 23 senators and 42 House members supporting the CHIPS for America Act, which would implement manufacturing and research incentives for the semiconductor industry. He proposed $50 billion to fund initiatives under the CHIPS Act in the $2 trillion jobs and infrastructure package introduced last month.
AlixPartners, a global consulting firm, has estimated that the industry has lost 1.4 million vehicles of production globally due to the chip shortage. The firm predicts up to 2.5 million vehicles could be lost this year and the industry as a whole would lose $61 billion if the trend continues.
Last year, people home-bound during the coronavirus pandemic spent more on electronics, prompting chip manufacturers to boost supply to tech companies as automakers slashed orders in the early days of the pandemic.
Semiconductor chips are crucial vehicle components, powering GPS, power steering, crash detection systems and more. When automakers restarted their plants last spring after an eight-week shutdown, the supply of chips failed to keep pace with unexpected demand for new vehicles in 2020.
Auto industry leaders have said that a portion of funding in federal proposals aimed at bolstering U.S. chip production should be set aside for the auto industry to prevent this from happening in the future, arguing automakers’ plans to increase production of electric vehicles — which fits into the administration’s goals to cut emissions from the transportation sector — may depend on it.
Asked Monday whether the administration would fulfill the automakers’ request, officials were noncommittal.
“One of the reasons the president is stopping by this meeting … is to hear directly from companies about the impacts, what would help them most through this period of time,” White House Press Secretary Jen Psaki said Monday.
“This isn’t a meeting where we expect a decision or an announcement to come out of, but part of our ongoing engagement and discussion about how to best address this issue.”
Bloomberg reported the administration has indicated privately to those in the semiconductor industry that it would not support “special treatment” for the auto industry.
However, the administration does see the chip shortage as a national security issue, Psaki said: “We believe there needs to be a holistic, long-term, across-government approach.”
Detroit automakers and leading groups representing the industry released statements Monday saying they appreciated the administration’s attention to the issue, with some again noting the importance of prioritizing automotive supply.
“We look forward to continuing to work with the Administration and members of Congress to address the global shortage and need for near-term prioritization of automotive semiconductors to help U.S. automotive manufacturing resume normal levels of production,” GM spokesperson Jeannine Ginivan said in a statement.
That’s largely due to “substantial subsidies” offered by foreign governments, they said, “placing the U.S. at a competitive disadvantage in attracting new construction of semiconductor manufacturing facilities.”
In addition to supporting the CHIPS Act, Biden also has ordered a 100-day review of the U.S. supply chains for electric vehicle batteries, rare earth minerals and semiconductors.
GM and Ford announced Thursday that additional plants would scale back production due to the chip shortage. The Detroit automakers are also partially building pickup trucks and setting them aside until enough chips can be found.
“We all know semiconductors are the building blocks of our future economy, and as we go through the data and digital revolution, semiconductors underpin so much of the new technology where we’ll see job creation,” Raimondo said during a briefing last Wednesday. “If we don’t invest in semiconductors, we’re going to fall further behind.”