The Supply Chain Matters blog highlights reports regarding yesterday’s initial White House summit on semiconductor supply resilience and its implications for multi-industry supply networks.

Yesterday, President Jose Biden along with U.S. National Security Advisor Jake Sullivan. Director of the National Economic Council Brian Deese, and U.S. Secretary of Commerce Gina Raimondo conducted an initial summit meeting with more than a dozen stakeholders relative to semiconductor device supply resilience strategies. This was part of the Biden Administration’s Executive Order calling for a review of four deemed strategic industries essential for U.S. national security and competitiveness.

The invited stakeholders included U.S. semiconductor producers, high tech manufacturers, automotive manufacturers and other companies vested in strategic semiconductor supply. Among the corporate names were Intel, Samsung, TSMC, Alphabet’s Google, HP, General Motors, Ford, among others.

According to various published reports as well as a White House readout statement, the forum heard directly from industry leaders on the impact of the semiconductor chip shortage currently impacting U.S. based manufacturers, short and long-term approaches to address shortages, along with the importance of encouraging additional U.S. based chip production capacity.

The President indicated to the participants that he has received bipartisan support from 23 U.S. Senators and 42 U.S. House members backing a proposal for appropriating $50 billion for semiconductor manufacturing and research.

White House Press Secretary Jen Psaki indicated the meeting showed that the administration is serious about addressing supply chain constraints and softening the impact for affected companies and workers.

Semiconductor Chip Manufacturing

Intel CEO Pat Gelsinger indicated to Bloomberg that the White House and Congress are working aggressively to support the semiconductor industry. TSMC representatives reportedly voiced active support of a U.S. strategy, amid current plans to construct $12 billion fab facility in Arizona scheduled to begin this year with volume production planned for 2024. In addition to TSMC, Samsung Electronics revealed additional details in a filing with the State of Texas regarding plans to construct a “cutting-edge” semiconductor facility within the United States. Bloomberg initially reported in January that Samsung had sights on investing in an advanced technology chip plant in the U.S.

There were reportedly some interests arguing for prioritization of supply for certain industries such as automotive. From our Supply Chain Matters lens, that tends to be not an ideal approach in strategic policy frameworks. Broad based industry supply resilience needs should be incorporated. From the reports that we have reviewed, there were voices advocating for a broad-based perspective.

According to reporting from The Wall Street Journal, a White House post meeting synopsis indicated that: “participants emphasized the need to better track the semiconductor supply chain to help mitigate shortages. Transparency was the topic of discussion, according to a person familiar with the matter.”

Such a statement will resonate with current participants of automotive or high-tech focused supply chain planning as well as integrated business planning teams. Chip manufacturers advocating for more succinct product demand requirements while industry manufacturers argue for more transparent perspectives on available supply.

The reality of this effort, beyond the initial political theater, is to address the needed resiliency of semiconductor supply networks. U.S. and China trade relationships continue to cool and with China itself becoming more vocal relative to the reunification of Taiwan, the global hub of advanced semiconductor fab production, the stakes grow far more significant in terms of the bifurcation of semiconductor, smartphone, telecommunications and now automotive supply networks.

As the industry knows all too well, bringing a state-of-the art semiconductor fab online takes a boat load of money and likely years of planning and deployment. That is the real intent of this White House effort, to provide an assessment, strategic roadmap. It further provides a framework of government and industry consensus on direction and commitment along with a potential pool of government financial incentives to spur domestic investment.

 

Bob Ferrari

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