“It’s a huge problem,” Commerce Secretary Gina Raimondo told CNN before leading a White House meeting with chip makers and users. “Everything in your life that has an on-off switch requires semiconductors. Your phone, your car, all the electronics around you.”
“The reason we’re really in this mess is because for a long time we haven’t invested,” said Raimondo, a former venture capitalist and governor of Rhode Island. “We looked away from the ball. We were the world’s leading semiconductor manufacturer and now we don’t do it anymore. We just divested.”
“It’s pretty simple. We need to make more chips in America,” Raimondo said.
Chip Shortage Means “Higher Prices, Fewer Options”
Raimondo acknowledged that semiconductor issues will be a challenge this holiday shopping season, when demand for smartphones, tablets, video game consoles, personal speakers and other gadgets increases.
“I hope it doesn’t feel horribly,” she said, adding that electronics companies have mostly been able to keep up with the demand. “But that will be more of what we’re seeing: essentially higher prices and fewer options.”
“We have never seen this”
The auto industry is being hit hard by the chip shortage.
Hit by production shutdowns, car dealerships have few vehicles in stock and consumers are paying more for cars than they can find.
Take for example a Ford dealership in Mahwah, New Jersey, which normally has 300 new cars on its lot. Today, it only has ten because of production stoppages.
“We’ve never seen this. It’s definitely a first for all of us,” Aaron Ringus, Mahwah Ford sales manager, told CNN.
Raimondo: chip shortages will last at least until end of 2022
Federal Reserve Chairman Jerome Powell cited the chip shortage as one of the many challenges facing the U.S. economy as the pandemic reopens.
Unfortunately, the semiconductor supply issues are not going to go away anytime soon.
“Honestly, I think we’re going to have a hard time with that next year until we can really alleviate some of these bottlenecks,” Raimondo said. “It won’t be that bad, but I don’t think it’ll be back to normal until much of 2022.”
Raimondo acknowledged that the timeline was “not out of the question”, adding that officials “will work hard to do better than that”.
“We ask nicely”
Biden officials are also launching a rapid response hotline that will allow businesses to immediately alert the government of disruptions caused by Covid outbreaks, extreme weather or wildfires.
“We need more information on what’s going on, where the chips are going, where the bottlenecks are, so that we can predict problems before they happen,” Raimondo said.
“Now at this point it’s voluntary. We kindly ask and hope they comply,” Raimondo said. “If they don’t, we’ll have to take a tougher stance.”
– Chris Isidore of CNN Business contributed to this report.