US Chip Industry Calls On Biden Administration To Fund Factories

Futurum Research’s Newman on how to avoid a chip shortage repeat

US Chip Industry Calls On Biden Administration To Fund Factories

The US chip group on Thursday sent a letter to President Joe Biden urging him to provide "substantial funding to stimulate semiconductor manufacturing" as part of its economic recovery and infrastructure development plans..

US Chip Industry Calls On Biden Administration To Fund Factories

The letter was signed by the heads of large American companies such as Intel Corp, Qualcomm Inc, Micron Technology Inc and Advanced Micro Devices Inc.

Appeals to the US government by American business groups come amid a global chip shortage that leaves Ford Motor Co and General Motors Co factory lines idle and automaker executives forecast billions of dollars in profit losses. Due to the limited number of chips available, it was difficult for consumers to even  buy popular game consoles such as Microsoft's Xbox and Sony Corp's Playstation.

What’s behind the global chip shortage

The missing chips are mainly produced in countries like Taiwan and South Korea that have become dominant in the industry. A letter sent by the Semiconductor Industry Association (SIA) states that the US share of semiconductor manufacturing has dropped from 37% in 1990 to 12% today..

«This is largely due to the fact that the governments of our global competitors offer significant incentives and subsidies to attract new semiconductor businesses, while the US does not.», – stated in the group.

Last year, Congress authorized subsidies for chip manufacturing and semiconductor research, but lawmakers still have to decide how much to allocate and provide. American trade association and a lobby group called on Biden to provide such funding in the form of grants or tax breaks.

«Working with Congress, your administration now has a historic opportunity to fund these initiatives to make them a reality», – written by Chip Group. «We believe that bold action is needed to address the challenges we face. The cost of inaction is high».