Biden promises US investment in semiconductors at Mack Trucks plant, as global shortage haunts auto sector

President Biden on Wednesday detailed plans to invest billions of dollars to support new semiconductor chip factories, as he spoke about the need to bolster American supply chains in Pennsylvania.

During a tour he was given at the Mack Trucks plant, Biden said, he was told that the company didn’t have the computer chips needed for their vehicles — which are basically not made in America anymore. 

He also referenced a recent announcement from Ford Motor Company about a reduction in domestic production over the chip shortage.

"These chips are in more than just vehicles, they enable so much of our modern lives – our smart phones, our televisions, our medical equipment," Biden said. "That’s why we’re investing $50 billion to have the best chip manufacturing in the world come and build factors in the United States of America."

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He said he has worked with bipartisan group of lawmakers on legislation that would require South Korea and Taiwan to open semiconductor chip plants in the U.S. to make the computer chips, employing American workers, "so we’re not held hostage."

Called the CHIPS for America Act, the legislation invests in incentives for domestic manufacturing facilities and research initiatives.

The president also pledged to close a "loophole" that has allowed contractors to sidestep a law requiring "substantially all" of the contents in products considered Made in America to be made domestically. He said his administration will issue a rule that 75% of content must be made in the U.S. in order for an item to be considered made in America — currently that threshold is at 55%.

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The semiconductor shortage affected the auto sector heavily throughout this year. General Motors recently announced that it would reduce some truck production in North America due to the global chip shortage, while Ford has also pulled back production at several factories.

Due to the pandemic, factories decreased output and companies reduced orders for chips — which led to a shortage when the economy began to recover.

It has also been noted that increased telework opportunities caused a rise in some consumer electronics purchases, which typically contain semiconductor chips.

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As previously reported by FOX Business, the Biden administration is looking to open as many as eight semiconductor chip factories in the U.S. within 18 months of the date that Biden signs the Innovation and Competition Act into law.

The administration is keen on building a "leading edge" chip plant in the U.S., according to a senior official.

The senior administration official added that Commerce Secretary Gina Raimondo believes the U.S. is too dependent on Taiwan for semiconductor chips while noting that just 12% are made in the U.S. — a figure that includes none of the cutting-edge chips required to run more sophisticated technology.

Multiple experts, including Intel CEO Pat Gelsinger, have predicted that the shortage will last until 2022 or 2023.