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US and EU: Solving the Global Chip Shortages

Since 2020, global chip shortages have been occurring due to the COVID-19 pandemic, a determining factor of the shortage. The pandemic caused the chip shortage because individuals would constantly consume them while locked indoors. Thus, the demand for computer chips has increased whereas supply has decreased due to the pandemic halting production.


Global Chip Shortages in 2021


As mentioned, the issue spiked from the global pandemic when lockdowns and other measures were imposed by governments. As a result, the demand for electronic devices has been high. However, the manufacturing process has been limited which makes it difficult to produce chips. As a result, corporations including Samsung have decided to delay some of their initial launches to ensure that everything stays in place.

However, it isn’t just the electronic corporations that are affected by this issue but also the automotive industry. Vehicles are also in demand as safe transportation from one place to another is critical. These services have been impacted as their dependence on silicon chips are higher than before.

Now, in 2021, the issue still remains where global leaders are trying to find ways to solve this problem and address the lack of supply. Although most countries have lifted their restrictive measures when it comes to lockdowns and quarantines, remote work and virtual learning remain as the population grows further dependent on these technologies. In addition, trading with other countries when it comes to chips has been delayed since other country-based industries still need them for their products. This increases pressure to quickly address the shortage. Ideas have been thrown around when it comes to addressing the chip shortage. For instance, corporations in the U.S have been asking for help from the government to fund manufacturing. There have been written guidelines submitted to the Biden Administration in 2020 to request funding for a program and subsidies to achieve this. Fortunately, President Joe Biden has acknowledged these requests, though Congress has not yet enacted a spending bill.


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The U.S and EU Alliance


Around September 2021, news media s have published that the U.S and EU are discussing certain solutions to solve the chip shortage. Both nations have agreed to possibly “rebalance” the global supply chain when handling the semiconductors since this is the source that most electronic devices or machinery uses. Hence, both have agreed to first identify the semiconductor value chain which caused the major supply gap when it comes to producing chips.

Of course, the COVID-19 pandemic was mentioned during the discussion. The commission is finding a way to implement new policies where chip production would boost without depending on other countries.

As the collaboration between these two parties has strengthened, their partnership focuses more and more upon understanding the weaknesses of the chip supply chain, as well as how new policies could support different stages of the chain, such as for semiconductors. Thus, the TCC will try to focus on the key areas which include green technology, climate and clean technology, data governance, and technology standards (usage and misuse). These goals are set with billions of dollars towards the effort of manufacturing for both global and domestic industries. The Biden Administration has also invited representatives from technological industries to discuss more information about their supply chain. Hence, the possible outcome from the council is to ensure cooperation regarding the chips to reach a transparent solution.


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