Will Congress Help With Chip Shortages?

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chip shortage

The auto industry is getting serious about asking Congress for help with chip supply. But what about help for consumer electronics companies?

First–the auto makers. On Tuesday, a group of car companies asked that Congress put aside some of the funding for chip supply specifically for automotive grade chips for car makers.  They said the auto industry may be forced to build 1.3 million fewer vehicles this year due to chip shortages. These shortages could also disrupt vehicle production for another six months, said an automotive group called the Alliance for Auto Innovation.

Ironically, a report in Automotive News said that after the car makers halted production early in the pandemic,  they went back to their factories asking for more chips, only to learn those factories were busy making chips for consumer electronics products!

“When they were ready to recommence production, they found that chipmakers were busy fulfilling orders for the consumer electronics industry which has seen demand for premium devices – both for work and leisure – boom as people spent more time at home,” said Automotive News.

That’s funny.  Consumer electronics companies say much of the chip production is going to the auto makers!

As for car audio makers, Memphis Audio alone said it lost “millions” of dollars last year due to product shortages, which were the result of parts, materials and chip shortages. Pioneer, Kenwood, JVC and Alpine have all said they have been impacted by chip shortages.

Back in February, the Biden administration asked that $37 billion in funding be devoted to “supercharging” the US semiconductor chip supply overall.  The money is available in a bill passed in both houses in December (called the National Defense Authorization Act), but must go through a separate appropriations process to be earmarked for chip supply. Automakers are asking that some of that be set aside for automotive chips.

Is there a lobby for consumers electronics companies to get their share of the $37 billion in chip aid, provided it passes Congress?  The Consumer Technology Association said, “The chip shortage is impacting our member companies broadly, including consumer electronics in areas such as PCs, mobile devices, automotive audio manufacturers and auto makers. It is a fluid and rapidly changing situation that we are closely monitoring with extensive input from member companies. We will be releasing a white paper soon that is designed, in part, to help lawmakers with policy decisions and to give industry a more comprehensive picture of the issues that led up to the shortage.”

That white paper should be released next week.

Also in February, President Biden signed an order for a 100 day review of products including semiconductors and batteries used in electric vehicles plus a longer term review of the supply chain for these and other products.  NY (D) Senator Chuck Schumer said that “semiconductor manufacturing is a dangerous weak spot in our economy and in our national security,” according to CNBC.

The US produces only 12.5 percent of the world’s chips.

Read more at Bloomberg.

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1 Comment

  1. When really trying to resolve a problem – we should ask “How can we NEVER be in this position again?” Respectfully, helping educate lawmakers on how the problem happened isn’t as important as how do we move forward…. the saddest part of this article is that the US only produces 12.5% of the worlds chips.

    At a time when we could all pass on a fair price increase – we should be spending time and money on that…. then we could take delivery time and Port issues out of the mix for good.

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