December 9, 2022

Car Makers to Get No Special Treatment in Chip Shortage, Commerce Secretary Says      

WASHINGTON—Commerce Secretary

Gina Raimondo

said she is looking for ways to help auto makers amid a global semiconductor shortage but won’t give priority to them over other chip users, as the industry presses the Biden administration for assistance.

Ms. Raimondo—who held meetings Thursday with about three dozen stakeholders, including executives from

Ford Motor Co.

F 6.73%

and

General Motors

as well as technology companies and chip suppliers—said in an interview that there are no easy solutions to the problem that has caused a major American industry to halt assembly lines.

“They are really struggling,” Ms. Raimondo said of auto makers. But she cited other chip users dealing with the crunch, including electronics and medical-device makers. Ms. Raimondo said while she is making the case for the auto industry, she is not calling for it to get special treatment. “I would not favor that approach; I have not been doing that,” she said.

A global shortage of chips is hitting everything from appliances to laptops.

Microsoft Corp.

and

Apple Inc.

are among an array of tech companies that have seen sales slump because of the crunch, which intensified after people rushed to buy electronics of all kinds during the pandemic.

The automotive industry was among the first to suffer significant production setbacks from the shortage late last year, and it has lobbied the Biden administration to help it secure chips.

Ford pickup trucks, seen on April 17, couldn’t be sold because of the global shortage of chips.



Photo:

Jim West/Zuma Press

“When you can’t assemble a vehicle in the U.S. because you’re missing a handful of semiconductors, that is an entirely different impact on the economy than the ability to put together a consumer electronic product in Asia,” said

Matt Blunt,

president of the American Automotive Policy Council, which includes Ford, GM and

Stellantis

NV, maker of Jeep and Chrysler.

“We certainly support the goal of ensuring that all industries have all the semiconductors they need to meet consumer demand, but until that’s the case we think it makes sense to give priority to the auto sector,” Mr. Blunt said.

Leading trade groups for the semiconductor industry and consumer electronics say they oppose any preferential treatment for autos.

“The chip shortage is affecting consumer tech companies across the board, from PCs and mobile devices to automotive audio manufacturers and auto makers,” said

Gary Shapiro,

who heads the Consumer Technology Association.

Ms. Raimondo has held discussions with suppliers, including the

Taiwan Semiconductor Manufacturing Co.

, the world’s largest contract chip maker. TSMC has said it is working closely with automotive customers and that providing supply is a top priority.

The chip shortage reflects a broader problem that will persist with the growth of electric vehicles, 5G and other technologies, Ms. Raimondo said, making a pitch for President Biden’s plan for tens of billions in investments to spur domestic chip production and research and development. In the short term, she said, more transparency in the supply chain could help: “A lot of this will come down to better forecasting and information sharing.”

Mr. Biden’s $2.3 trillion infrastructure proposal includes $50 billion for the American semiconductor industry. The president is in talks with lawmakers about how to move forward with infrastructure legislation. A separate bill under consideration in the Senate that is focused on countering China would push $52 billion toward the chip industry.

The global chip shortage has forced auto makers to put some of their production on hold, costing the industry an estimated $110 billion of lost revenue this year, according to the New York-based consulting firm AlixPartners.

Auto makers have been pushing chip manufacturers to retool factories and ease the shortage. Some chip companies have sought to accommodate them, but the auto industry’s problems aren’t quickly solvable, according to chip-industry executives. Auto makers canceled chip orders early in the coronavirus pandemic, not expecting demand to pick up in the near future. When demand spiked late last year, factories were already committed to making chips for laptops and other hardware in high demand amid the work-from-home shift.

As tech companies become a key part of the auto industry, cars are looking more like giant computers on wheels. To understand why a tech giant like Apple might want to make a car, we built one out of iPhone parts. Photo illustration: Alex Kuzoian/WSJ

Chips play an increasingly important role in the auto industry, controlling ever-larger touch screens and advanced self-driving features, among a plethora of other more mundane functions. Many of the chips auto makers need are from older generations of technology where companies haven’t invested as much money in recent years because it is less profitable.

Auto makers and chip makers had a chance to address the shortage during a White House meeting in April, although chip executives say their hands are largely tied by prior commitments and the length of time it takes to add production capacity.

Pat Gelsinger, Intel Corp.’s chief executive, told The Wall Street Journal in April that his company could start helping with some key areas of shortage in six to nine months.

Write to Alex Leary at [email protected] and Asa Fitch at [email protected]

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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