U.S. President Joe Biden speaks briefly in the Oval Office on Feb. 2 before signing several executive orders on immigration.
The Nikkei Shimbun reported Tuesday (Feb. 23) that President Joe Biden will sign an executive order as early as this month that will see the U.S. work with Japan, South Korea, Taiwan and Australia to speed up its dependence on China for chips and other strategic goods in the supply chain.
A draft of the executive order obtained by the Nikkei Shimbun says Biden will order a national supply chain strategy to reduce the disruptions that natural disasters and sanctions from “unfriendly countries” can cause to important industry chains. Key industry chains include: chips (semiconductors), electric vehicle batteries, rare earths and medical supplies.
The draft executive order says the White House believes that working with allies can build stronger, more resilient chains; for chips, Washington will seek cooperation with Taiwan, Japan and South Korea; for rare earths, it will work with Asia-Pacific economies, including Australia.
The draft also says the U.S. plans to share information with allies in the chain of critical materials and seek to leverage complementary production; at the same Time, the U.S. is considering rapid sharing of inventories and capacity among all parties in case of emergency; and the U.S. may also ask allies to do less business with China.
Currently, the U.S. imports 85 percent of its rare earths and 90 percent of its medical supplies from China. The former Trump administration has warned that heavy reliance on China for critical supplies poses a national security threat; for example, in 2010, the Chinese Communist Party banned rare earth exports to Japan over the territorial dispute over the Diaoyutai Islands.
The U.S. and Japan are already promoting cooperation with Taiwan on chip production
The Nikkei also quoted a Japanese government official with knowledge of the situation as saying that the U.S. is conducting a comprehensive review of the global industrial chain to understand what countries the U.S. should rely on to supply chips and rare earths, and that the U.S. will then discuss countermeasures with its allies.
In 1990, the United States produces 37% of the world’s chips, which has now fallen to 12%. Taiwan currently produces 22% of the world’s chips and is the world’s largest chip production region, but the current factories are overloaded and cannot further increase capacity in the short term.
Reorganization of the supply chain may take quite a long time, especially in the chip industry. Due to the limited number of the world’s top chip makers, whether these companies are willing to follow the instructions of the U.S. government is not yet known, while the move also requires the cooperation of other governments to do so.
Since last year, especially after the New Coronavirus (CCP virus) outbreak from Wuhan, the former U.S. President Donald Trump Administration has paid more attention to industry chain security issues and cooperated with Taiwan, Japan and Australia in terms of technology and resources.
For example: In November 2020, Taiwan and U.S. officials signed a memorandum to promote cooperation in seven areas of science and technology; TSMC also committed to invest $12 billion at the invitation of the United States to set up a plant in Arizona to produce military chips, which is expected to be put into operation in 2024, and the U.S. government will provide subsidies for the project.
The Japanese government has also set aside $1.9 billion to invite TSMC to set up a factory in Japan to produce chips and cooperate with Japanese companies.
Rare earths, the United States is also working with Australia, the U.S. Department of Defense to provide financial resources to assist the Australian rare earths developer Lynas to build processing facilities in Texas.
Bloomberg: Biden to sign supply chain executive order on Wednesday
People working from Home during the pandemic led to a surge in demand for electronic devices and cell phones, among others, and global demand for chips in recent months has strained the supply of key components for a range of electronic devices.
Automakers have been hit particularly hard by chip shortages, from modules that manage engines to automatic braking and assisted driving technology, many systems must use chips, and some U.S. car production has been forced to run aground.
Bloomberg Tuesday afternoon also cited sources familiar with the matter, said Biden has invited domestic lawmakers from both parties to the White House on Wednesday (23) to discuss the global chip shortage, Biden is expected to sign an executive order to strengthen the supply chain of chips and other important products.
The executive order Biden is about to sign appears to be the same as the one reported by Nikkei News.
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