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Chip shortage still expected to worsen in the US, says Secretary of Commerce

The worldwide shortage of chips computer is fueling the flames of inflation and limiting the supply of everything from iPhones to new cars.

Sadly, this highly disturbing shortage is unlikely to disappear “by 2022,” US Commerce Secretary Gina Raimondo told CNN.

Raimondo, who recently visited semiconductor factories in Asia, said the short-term problems linked mainly to Covid-19 should be resolved during the second half of next year.

This prevents any further shocks from Covid-19 that could deliver another blow to supply chains.

“Hopefully, in the next year or maybe a little earlier, the short-term crisis will be better,” Raimondo said during an interview from his Washington office. “The long-term problem will take years to resolve. We just don’t make enough chips in the United States.”

Computer chips are essential components for a wide range of products, from fitness equipment and tablets to coffee machines. And they are vital to meeting the government’s climate ambitions Biden. Each velectric vehicle it has about 2,000 chips – or nearly double what a traditional car has.

Even so, only 12% of the world’s computer chips were made in the USA last year, according to the Semiconductor Industry Association. The figure dropped from 37% in 1990.

“This will only get worse”

Covid-19 exposed how the intricate US supply chains are sensitive to shocks, even those happening halfway around the world. Disease outbreaks and extreme weather conditions abroad hampered chip production in Asia, while demand simultaneously soared.

That’s why the Biden government is championing the CHIPS for America Act, a $52 billion investment that would encourage domestic semiconductor production and research.

“We are begging Congress to pass the bill. This has to happen by Christmas. This cannot take months,” said Raimondo.

Although Congress passed the legislation last year, lawmakers are still working to provide resources for the provisions.

The funding of the legislation passed the US Senate in June but has not yet been voted on in the House.

The problem is, even if the funding gets to Congress, it will take years to build and expand entirely new computer chip factories.

“This is a crisis now and it will only get worse,” says Raimondo.

New Car Prices Rise at Fastest Rate Since 1970

The CEOs of dozens of major companies, including Ford, Nvidia and Verizon, sent Congressional leadership a letter on Tuesday calling for “immediate action” on advancing the CHIPS for America Act to address the chip shortage.

“Unfortunately, demand for these critical components has outstripped supply, creating a global shortage of chips and resulting in lost growth and jobs in the economy,” the CEOs wrote.

“The shortage has exposed vulnerabilities in the semiconductor supply chain and highlighted the need to increase domestic manufacturing capacity.”

The last months, Apple, Ford, General Motors and other companies were forced to slow production of their products, in large part due to shortages of chips.

The shortage of chips contributed significantly to the highest inflation peak in three decades us United States.

New car prices rose 10.6% in October from a year earlier, the biggest increase in 12 months since 1975. And the shortage of new cars is increasing demand for used cars, whose prices soared by nearly 32% in October in compared to the previous year.

Workers laid off due to shortage of chips

In September, the Commerce Department asked the industry to give the federal government more information about its intricate supply chains.

The voluntary survey aims to ensure that chips get where they are needed and increase the visibility of potential bottlenecks. It could also be used to attract more private investment to build new factories in the United States.

Raimondo says to CNN that the Commerce Department has received more than 150 industry responses so far, including new insights into chip orders, inventories and bottlenecks. “The response has been great,” she said. “We are very satisfied”.

Raimondo had already threatened to invoke a Cold War-era law to force companies to share information if they didn’t do so voluntarily.

During a meeting in Detroit, Michigan, with automakers on Monday (29), the secretary said executives applauded the request for information.

“They said that when we placed the order for the first time, they didn’t like it because it’s a lot of work. But they thanked me for doing it,” Raimondo said, adding that he is forcing companies to become more transparent and have a greater understanding of how they do business. “I was surprised”.

The chip shortage isn’t just pushing up prices for American families. It is also damaging the livelihoods of factory workers, especially those in the auto industry.

“Every company we’ve talked to has laid off significant numbers of workers or licensed … thousands of workers, simply because of the lack of semiconductors,” Raimondo said of his visit to Detroit.

“They have all the other supplies they need, but they can’t get the chips. So they closed the factories.”

*(Translated text. Click here to read the original, in English)

Reference: CNN Brasil

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