General Motors and other major automotive industry players are pressing the federal government to step in and try to remedy the ongoing global semiconductor microchip shortage before the situation worsens, Reuters reports.
The Alliance for Automotive Innovation, a trade group that represents a large number of major automotive manufacturers and suppliers, said in a letter this week that federal funding should be used “to build new capacity that will support the auto industry and mitigate the risks to the automotive supply chain,” evidenced by the current microchip shortage. The AAI represents General Motors, Ford, Volkswagen, Toyota, Hyundai, BMW, Bosch, Cruise, Denso and many others.
In February, President Joe Biden signed an executive order to secure $37 billion in funding to help support local semiconductor chip manufacturing in the United States. The majority of semiconductor chips are currently made in Asian countries like China, Taiwan and Korea.
“I’m directing senior officials in my administration to work with industrial leaders to identify solutions to the semiconductor shortfall,” Biden said. “Congress has authorized a bill but they need $37 billion to make sure that we have this capacity. I’ll push for that as well.”
A global shortage of semiconductor chips, which are widely used in the various electric systems in modern-day automobiles, has reduced global vehicle production output in recent months. GM has been forced to cut production at a number of its facilities due to the chip supply constraints, including at the GM Fairfax Assembly plant in Kansas and GM San Luis Potosi plant in Mexico.
The COVID-19 pandemic is partially to blame for the microchip shortage, bringing on production setbacks due to a lack of materials, parts and personnel. Rising demand for consumer electronics like laptops and tablets has also impacted the automotive industry’s ability to secure the microchips it needs.