White House Convenes Summit To Address Supply Shortage Crippling Auto Plants

Apr 12, 2021
Originally published on April 12, 2021 12:58 pm

Updated April 12, 2021 at 3:35 PM ET

President Biden, joined by top foreign and domestic policy advisers, met virtually with 19 CEOs Monday, as his administration tries to deal with a critical supply crunch that is slowing U.S. automobile manufacturing and threatens other sectors, including national security, according to experts.

Biden, national security adviser Jake Sullivan, National Economic Council Director Brian Deese and Commerce Secretary Gina Raimondo gathered the broad range of CEOs to discuss a growing shortage of semiconductors, a key component of many computerized electronics.

The increased demand, as well as the disruption to steady supply chains that the pandemic brought into focus over the past year, has led to a renewed push by Biden, lawmakers from both parties, and industrial leaders to build up domestic semiconductor manufacturing.

Speaking to the 19 CEOs during the portion of the meeting that was open to the press, Biden voiced support for legislation speeding up that transition, and the president highlighted aspects of his $2 trillion infrastructure plan that focus on building up U.S. semiconductor manufacturing.

Biden also used the meeting to try to build support for the broader proposal. "These chips, these wafers — batteries, broadband — it's all infrastructure. This is infrastructure," Biden said. Many congressional Republicans have criticized the administration's proposal as too broad and only loosely tied to traditional infrastructure proposals like rebuilding roads and bridges.

While the American Jobs Plan does not appear to have any support yet from Republican lawmakers, Biden pointed out the push for more domestic semiconductor manufacturing is bipartisan.

"This is an issue that has broad support in the United States Congress," Biden said.

The semiconductor shortage touches nearly every industry, but U.S. automakers have been especially hit hard. General Motors, Ford and Stellantis (formed by a merger involving Fiat Chrysler) have all temporarily closed down auto plants as the companies wait for more supplies of the parts needed for increasingly computerized cars.

The White House summit included those three companies as well as computer companies such as Dell and HP; AT&T; Alphabet, the parent company of Google; and defense contractor Northrop Grumman, among others.

The president had already ordered a review addressing what the federal government can do to move more semiconductor manufacturing to the United States and to make existing supply lines more resilient. Biden also held a bipartisan meeting in February where he discussed the agreement among both Republicans and Democrats that the semiconductor shortage needed to be addressed.

Industry leaders have welcomed the White House attention. "It's a great opportunity for us to talk about long-term solutions to fix this problem," said John Neuffer, chief executive officer of the Semiconductor Industry Association.

"In 1990, [the U.S.] manufactured about 37% of the world's semiconductors. Now we only manufacture 12%," Neuffer said. "That is a supply chain vulnerability that has come into bold relief over the past year."

Demand for new cars has spiked from low interest rates and pent-up demand during the pandemic, and that has exacerbated the problem for carmakers. But Daleep Singh, a deputy national security adviser and deputy director of the National Economic Council, told NPR that the Biden administration sees the shortage as a much broader national security problem.

"Semiconductors are critical for most of the emerging technologies you could list," he said. "They're civilian and military in their purpose. Pharmaceuticals, space, but also weapons systems and their satellites. So here's the problem: Today 100% — all of the most advanced semiconductors are produced in East Asia, and more than 90% by one company. That's a critical vulnerability."

: 4/11/21

An earlier version of this story misspelled John Neuffer's name.

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NOEL KING, HOST:

The auto industry is dealing with a shortage of semiconductors. Those are small computer chips that power your car, your phone, a lot of other stuff you use. Most of them are manufactured in Asia. And because of the shortage, some car factories have stopped producing. The White House is holding a meeting today with executives from dozens of companies. And NPR White House correspondent Scott Detrow is following. Good morning, Scott.

SCOTT DETROW, BYLINE: Good morning.

KING: So car factories stopping production in some cases. How serious is this?

DETROW: Yeah, this is affecting a lot of industries but car - the auto industry the most. Cars are just becoming more and more computerized, like everything else, and demand for cars is really surging right now. There's this huge supply shortage and just not enough semiconductors to go around to make cars. So two more General Motors plants just announced temporary shutdowns because they don't have the materials they need. GM has now paused more than a half-dozen plants. Four Ford plants are temporarily shut down as well, among other automakers.

KING: OK, so real impacts. And then the White House is holding this call with industry leaders. What does the White House want to do about it?

DETROW: President Biden has already ordered a review looking at what the federal government can do to make sure more semiconductors are manufactured in the U.S. and that the supply chain is more steady because there is the supply issue but also a sustained environment of trade wars and more economic nationalism with China in particular. So today, the White House - officials there are meeting with people from 19 different companies across a wide range of industries to talk about the problem. I interviewed Daleep Singh about this. He's a deputy national security adviser in the administration, also the deputy director of the National Economic Council. And he says the White House knows this is a serious economic problem. And when you look at how many other industries rely on semiconductors, particularly the most high-capacity ones, it's a national security problem, too.

DALEEP SINGH: Pharmaceuticals, space but also weapons systems and satellites. So here's the problem - today, 100% - all of the most advanced semiconductors are produced in East Asia. That's a critical vulnerability.

DETROW: The administration wants to spend $50 billion to boost domestic manufacturing of semiconductors. And in the president's infrastructure plan, there's a proposal to spend the same amount of money creating a new Commerce Department office to oversee all of this.

KING: So is this phone call today about the Biden administration selling the Biden administration's infrastructure plan?

DETROW: That is certainly a big part of it. And from the messages we've heard, the White House also seems to be making it clear to these companies that it is ready to intervene. President Biden and his top advisers have centered a lot of policy around the need to make economic interests of middle-class Americans central to both foreign and domestic policy and, just as importantly, to let voters know that they're doing this. And the administration is also taking an active, expansive view of how to use the power of the federal government and making it clear it's comfortable redirecting private industry when they think it's in the national interest. In this case, that would be making sure more semiconductors are manufactured here in the U.S. Singh was really blunt about this in our interview.

SINGH: The reality is that at home or abroad, we don't believe - I don't believe the private sector by itself is going to solve the biggest problems we have in our society - and whether it's extreme levels of inequality and social disparity, whether it's an existential climate crisis or people dropping out of the workforce or stagnant wages.

DETROW: So that's the mindset the administration is taking to so many issues right now. And you could see it at play in this $2 trillion infrastructure proposal, a lot of areas where it would seek to reshape a lot of different industries.

KING: NPR White House correspondent Scott Detrow. Thanks, Scott.

DETROW: Thank you.

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