Shortage of semiconductors is a security risk, and what the U.S. can do about it
Share Now on:
We’ve been talking a lot lately about how a shortage of semiconductors has been slowing down the production of everything from cars to computers to appliances. Now the Biden administration is warning that the problem is more serious than that.
Commerce Secretary Gina Raimondo told a Senate committee yesterday: “It is not an exaggeration to say, at the moment, that we have a crisis in our supply chain. Not that long ago, America led the world in making leading-edge semiconductor chips. Today we produce 0% of those chips in America, 0%. That’s a national security risk and an economic security risk. The Department of Defense has been warning us for years, that the decline in our small- and medium-size manufacturers in critical supply chains is a national security risk.”
Semiconductors are also an important component in military equipment, which is just one reason President Biden’s infrastructure proposal calls for $50 billion to create a technology directorate that would focus on their manufacturing, among other things.
The most advanced semiconductors are currently made by TSMC, a company in Taiwan. “Should we rely on one single company to make the most advanced chips?” asked Damien Ma, director of MacroPolo, the think tank of the Paulson Institute.
Biden’s infrastructure package designates $50 billion to boost the U.S. chip industry. It’s a lot of money, but not in semiconductor world, according to Stacy Rasgon, a semiconductor analyst at Bernstein Research. “It’s not going to move the needle that much,” he said.
“TSMC, which is a single company, is getting ready to spend $100 billion over the next three years, versus $50 billion in the U.S. over multiple years for the entire U.S. semiconductor industry –– it’s not that big.”
Commerce Secretary Raimondo said that money would be matched multiple times in private spending. But Rasgon cautioned that building up U.S. manufacturing capacity will require more than money, including immigration and education reform to staff plants.
And turning inward can’t be the whole solution, according to Tatyana Bolton, policy director for the R Street Institute’s Cybersecurity and Emerging Threats team.
“The answer is not completely onshoring semiconductors and every other item that we make across the world,” Bolton said, adding that the U.S. just needs to maintain some minimum viable amount of manufacturing capacity and then go to allies to forge “a network of interconnected manufacturing and production so that we are secure.”
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.
Give today and get our limited edition tote.