Cramer calls on the US to fund factories to tackle the shortage of chips and unemployment

CNBC’s Jim Cramer said on Wednesday that the United States should fund the development of a chip factory to address both the high unemployment rate in the country and the shortage of chips affecting US companies.

More and more companies, including carmakers like Ford and General Motors, have recently raised the alarm about the global supply of components, reducing the production of their own products.

Meanwhile, with a 6.3% unemployment rate, the US labor market is struggling to come to grips with the coronavirus-induced recession.

“We need more chips and we need more jobs,” Cramer said of “Mad Money.” “Why don’t you kill two birds with one stone? It is time our government invested in the construction of the largest and best complex of semiconductor foundries… in the world.”

Cars are becoming more and more technological, requiring silicone chips for things like power steering, brake sensors and entertainment equipment. The scarcity of supply has forced GM and Ford to close factories, delaying the delivery of new cars. GM warned the disruption could affect its 2021 goals.

The demand for chips, which are also used in products such as televisions, game consoles and computers, soared during the pandemic as Americans moved to remote work and learning environments. Cramer also blamed globalization, which allowed companies to outsource manufacturing to giants like Taiwan Semiconductor and Samsung Electronics in Asia.

The more cars are connected, the more semiconductors they need.

“Believe me, you will hear about this shortage all the time, on a daily basis, because it causes great damage to all kinds of industries and makes us a much less competitive and maybe even taken hostage. Hostage by a bigger chip customer, the PRC. (China). anticipate this. ”said Cramer.

“Our companies cannot get enough chips because there is not enough production worldwide, and that lack of chips is hurting all types of production,” he added.

He said he was optimistic about Gina Raimondo, the governor of Rhode Island nominated by President Joe Biden to lead the US Department of Commerce. Raimondo is a former venture capitalist, which gives her an ideal perspective on the business world, Cramer said.

He also said the low interest rate environment could be a catalyst to help fund the federal project with bonds.

“America’s best technology industry, the most intellectual property anywhere in technology, resides in the semiconductor device space,” said Cramer, pointing to companies like Lam Research, KLA Tenor and Applied Materials that have machines that are needed to make chips.

“Meanwhile, building gigantic semiconductor foundries can employ more people than just about any other infrastructure project.”

Disclosure: Cramer’s charity owns Ford stock.