In the past few weeks, US automakers have been hit hard by a global semiconductor shortage. It is the most recent problem that arises from America's over-reliance on a variety of industrial imports.
After the COVID-19 pandemic disrupted global supply chains, U.S. automakers are now trying to get an adequate supply of computer chips that do everything from power steering to navigation systems to collision sensors. The problem is serious enough that both GM and Ford have ceased production.
The Biden administration is working hard to address the problem, along with other serious vulnerabilities in the supply chain. The president has already issued an executive order listing key import dependencies, including semiconductors. It's a promising start, but the United States must rapidly rebuild its domestic chip manufacturing industry to reduce the nation's reliance on overseas suppliers.
Why are semiconductors so important? Because computer chips are not only the “brain” of computers, cars and medical devices, but also of weapon systems that support the American military. The reliance on imported computer chips makes America's national security vulnerable to the whims of the global marketplace.
Taiwan is currently a major player in the chip industry. Taiwan Semiconductor Manufacturing Company (TSMC) alone accounts for more than half of global chip sales. However, China has invested an impressive $ 120 billion to dominate future semiconductor production – something that could threaten US security if chips are used in delicate products and installations.
It's time the United States brought back its semiconductor industry. But how does it work?
President Biden's Executive Order provides a helpful template as it encompasses both the current semiconductor shortages and the raw materials needed to build computer chips, medical devices, and batteries for electric vehicles.
Modern industry is built on semiconductors, which in turn are made up of a variety of minerals, including silicon, graphite, copper, gallium, and rare earth metals. What is worrying is the extent to which China dominates the global supply of these vital resources.
For example, China controls 70% of the world's lithium supply, 80% of the rare earth metals, and approximately 70% of the world's graphite. These materials are indispensable in the manufacture of everything from batteries for electric vehicles to solar panels and semiconductors.
To get back into the computer chip business, the US not only has to rebuild local foundries for chip manufacturing, but also has to source the minerals and metals it needs at home. This would be the first step in ensuring a safe, responsibly produced supply chain for US industry.
Worryingly, America's dependency on mineral imports has doubled in the past two decades – despite the fact that the US has an estimated $ 6.2 trillion in mineral reserves. The rebuilding of semiconductor production must go hand in hand with a revitalization of the American mining sector.
Congress and the president should implement reforms to support a significant increase in US chip manufacturing, with the goal of producing 50% of semiconductors in all major categories. Policy makers should also ensure that semiconductor inputs and devices are not sold to companies with Chinese military ties.
The restart of the American computer chip industry could create hundreds of thousands of well-paying manufacturing jobs. The US can resume its position as the world's leading manufacturer of semiconductors – something that would strengthen America's national security and industrial self-sufficiency.
– Michael Stumo is CEO of the Coalition for a Successful America. Follow him on @michael_stumo.