The US government is demanding better support from manufacturers and customers in the fight against the global chip shortage. Information about supply chains, which chips are exactly missing, where bottlenecks are slowing down or who has accumulated large inventories are crucial in order to be able to plan remedial measures. US Secretary of Commerce Gina Raimondo is putting pressure on: The companies have so far been too silent about what needs to change.
The US president could force companies to disclose their data. It is based on a law from the Korean War, which is intended to support the supply of goods and services in the interests of national security. This law called Defense Production Act of 1950 gives the President appropriate powers.
For example, the then US President Donald Trump used this war law in March 2020. He ordered manufacturers of certain medical equipment to make their products available to the public before other orders were fulfilled. This was to support the fight for the lives of COVID-19 patients. In addition, everyone was prohibited from improperly storing relevant products and selling them at “fair market prices”.
There is a lack of trust
There is also a rumor of improper storage of computer chips: given the scarcity, some companies are hoarding chips, which in turn leads to scarcity. It’s not just a simple vicious circle. Even the suspicion of hoarding leads to manufacturers no longer trusting the market data. They do not know how great the demand for which semiconductors really is. They fear a sudden collapse in demand for certain chips and are therefore only hesitant to invest in their production.
The minister believes that the situation could be improved by disclosing order books, stock lists and pointing out deficiencies. She has published 13 questions twice, which she would like to have answered by manufacturers, customers and consumers. If the response from important companies is too low or too cautious within 45 days, she wants to activate the war law.
US aid to manufacturing centers in Asia
Raimondo and Brian Deese, director of the US National Economic Council, made this clear on Thursday at a meeting with business leaders. Managers from Intel, GF (GlobalFoundries), TSMC, Ampere Computing, Micron, Apple, Microsoft, Samsung as well as vehicle manufacturers from the USA and Germany took part. The managing directors assured more transparency at the meeting.
The US government is now stepping up its State Department and US embassies in Asia. They are supposed to recognize and report signals of possible supply problems at an early stage, for example pandemic waves, storms or other circumstances that could lead to production cuts or factory closures.
In this context, the US plans to work with foreign governments and support health measures and provide technical know-how. This is intended to accelerate the reopening of important factories that had to be closed in whole or in part due to the coronavirus pandemic. Of course, the United States of America expects preferred chip delivery to US buyers in return.