The US still relies heavily on other countries to manufacture technology (among other products), and President Biden is looking for ways to reduce that dependence. The LA Times has learned that Biden is ordering a review of US supply chains for semiconductors, “high capacity” batteries and rare earth minerals to ensure reliable access to those elements. While the effort isn’t explicitly targeting China, unnamed officials told the Times the US was “overly dependent” on that country.
According to the officials, this is not just a superficial report – the aim is to “close gaps” and create “diverse and resilient” supply chains.
The Biden government confirmed these plans shortly after this story was published. To begin with, the administration ordered an “immediate 100-day review of federal agencies to address vulnerabilities in the supply chains of four major products.” The executive order also calls for a year-long investigation into a “wider array of US supply chains.” The evaluation will focus on six sectors: “the industrial base for defense; the industrial base for public health and biological preparedness; the industrial base for information and communication technologies (ICT); the industrial base for the energy sector; the industrial base for transportation, and supply chains for agricultural products, raw materials and food production. “
If there are changes, they could go a long way in addressing problems currently plaguing the US industry. For example, car manufacturers are struggling with a shortage of chips while demand returns. A more diverse supply chain could reduce those bottlenecks and help American businesses (plus those that depend on them) thrive. That could be especially important as Biden hopes to boost electric car sales and otherwise help the US claim or maintain its technological advantages.
It is not clear whether the assessment helps. While companies like Apple can relocate production to Vietnam and otherwise limit their reliance on China, it’s not as easy as cutting ties. Production often takes place in China for convenience: a company can get rare earths, components and final assembly in one place instead of having to ship them overseas. Biden may be able to rid some companies of Chinese production, but there may be many companies that don’t have much choice.
Update, 1:20 PM ET: Added details of the confirmation of these plans by Biden’s administration.