US President Biden orders review of US supply chain
On 24 February, US President Joe Biden signed an executive order (EO) requiring a 100-day review of the risks facing the US supply chains for semiconductors, high-capacity batteries, critical minerals, and pharmaceuticals. Additionally, the EO requires a longer, one-year review of the supply chain in six sectors of the economy. The reviews will consider US manufacturing capacity, workforce requirements, climate risks, and the need for research and development capacity to sustain national leadership.
Though neither the order, nor the President when signing it, directly mentions China, reducing or eliminating reliance on Chinese goods for key parts of the US supply chain is clearly the motivating factor of this mandated review process.
An example of that reliance is dependency on China for many critical materials, which has long been a concern for US officials. Perhaps the most critical of these materials are rare earth minerals, of which China holds the largest known reserves and is one of the major producing countries. This issue is coming even more to a head as China finalizes implementation of their Export Control Law (ECL), which, at least in draft form, would include rare earths as part of this new export control regime. This new ECL has the potential to be used as a way to limit or block rare earth exports to US-based buyers. Rare earths are critical materials for many technology areas, such as quantum and 5G.
Regarding semiconductors, President Biden stated that he is "directing senior officials in my administration to work with industrial leaders to identify solutions to this semiconductor shortfall and work very hard with the House and Senate." Unfortunately, the EO will not solve the current supply chain issues being faced in the US, which have caused auto manufacturers to halt production. However, the goal of the review will be to come up with plan to prevent such shortages in the future, not only by increasing domestic production, but also by working with reliable supply chain.
Congress was already eyeing the issue of semiconductor chips shortage. Prior to the EO being signed, Congress passed The CHIPS Act as part of the FY21 National Defense Authorization Act (NDAA). The bill authorizes an array of semiconductor R&D initiatives and a subsidy program to support domestic chip production. However, passage only authorized the bill's activities, and did not provide the funding needed to accomplish its goals. When signing the EO, Biden called for $37 billion in emergency funding toward the new semiconductor chip initiative established in the bill, something Senate Majority Leader Chuck Schumer has said he is looking to move forward in spring of this year.
Notably, the importance of shoring up the US supply chain is one of those rare issues where Republicans and Democrats are in agreement. The President met with a bipartisan group of congressional leaders before signing the bill and stated, "It was one of the best meetings—it's the best meeting I think we've had so far, although we've only been here about five weeks. But it was like the old days—people actually are on the same page." This tone hints at good things for moving forward any needed legislative changes or funding that come out of the EO review process.
It is too early to tell exactly what policy changes or federal investments will come out of this mandated review process, but it is clear that the new administration is very aware of vulnerabilities in the US supply chain and considers fixing these issues a top priority.
Jennifer O'Bryan is the SPIE Director of Government Affairs.
|Enjoy this article?
Get similar news in your inbox