U.S. President Biden Orders National Supply Chain Security Review
U.S. President Joe Biden signed an executive order that requires U.S. agencies to review supply chain security risks and coordinate with federal partners, industry, and state and local partners to strengthen them.
“This is about making sure the United States can meet every challenge we face in this new era—pandemics, but also in defense, cybersecurity, climate change, and so much more,” Biden said in a White House briefing. “And the best way to do that is by protecting and sharpening America’s competitive edge by investing here at home.”
Yesterday, I met with a bipartisan group of House and Senate members to discuss U.S. supply chains and then took executive action to strengthen them. The American people should never face shortages when it comes to the goods and services they rely on. pic.twitter.com/y342c3AX5C
— President Biden (@POTUS) February 25, 2021
Under Biden’s executive order, agencies must conduct a 100-day review into vulnerabilities in the U.S. supply chain for critical items, including semiconductors, high-capacity batteries, critical minerals and strategic materials, pharmaceuticals, personal protective equipment (PPE), and more.
U.S. secretaries of Agriculture, Defense, Energy, Health and Human Services, and Transportation are then required to submit reports within one year on the preparedness of their supply chains, so federal agencies can make recommendations for adjustments. These reports must include what risks—such as cybersecurity, climate, or homeland security—would make the supply chains “vulnerable to failures or exploitation, and risks resulting from the elimination of, or failure to develop domestically” the capabilities to produce them.
The reports must also include information about the resilience and capacity of American manufacturing supply chains and the industrial and agricultural base to support national and economic security, emergency preparedness, the ability to modernize to meet future needs, and supply chains with a single point of failure, single or dual suppliers, or limited resilience.
“More resilient supply chains are secure and diverse—facilitating greater domestic production, a range of supply, built-in redundancies, adequate stockpiles, safe and secure digital networks, and a world-class American manufacturing base and workforce,” according to the order. “Moreover, close cooperation on resilient supply chains with allies and partners who share our values will foster collective economic and national security, and strengthen the capacity to respond to international disasters and emergencies.”
Biden’s actions came after a year in which U.S. supply chains were under immense pressure and occasionally failed. For instance, in the beginning of the COVID-19 pandemic, hospitals, companies, and government institutions struggled to supply workers, residents, and patients with PPE to prevent the spread of COVID-19.
The United States—like other nations—was also impacted by a global shortage of semiconductors, caused by increasing demand for chips, used in everything from smartphones to vehicles, that grew when supply was limited due to manufacturing plant closures and decisions to divert chips to other sectors. The shortage has hit the auto manufacturing sector hard, with Ford, GM, Tesla, and others making significant changes to their production schedules while they attempt to obtain chips for their products.
“Those chip manufacturers, as well as wafer manufacturers, started redeploying their capacity to like consumer electronics, which was growing because of people working from home and virtual working patterns,” according to CNBC’s coverage of Ford Chief Product Platform and Operations Officer Hau Thai-Tang’s speech at an investor conference. “Fast forward, if you add 26 weeks to when they made those decisions, the drop-off or the trough in the supply started to hit automotive the latter half of last year, going into Q1.”
Melissa Griffith, public policy fellow with The Wilson Center’s Science and Technology Innovation Program, says that ensuring an “innovative, resilient, and secure semiconductor industry” is one of the most pressing issues the United States is facing during Biden’s first 100 days in office.
“The fifth generation of cellular networks, artificial intelligence, quantum computing, and even the auto industry all depend on semiconductors,” she says. “Moreover, the geostrategic importance of many of the applications, or use cases, they power today and will power in the future place this technology front and center as a national security concern.
“The necessity of security and availability of supply chains has been strikingly laid bare by the current global chip shortage squeezing the auto industry around the world. But the breadth of the issue is far wider. Collectively, the U.S. and allied countries face significant gaps in their domestic capabilities around the production, if not design, of integrated circuits at scale, as well as the rare Earth elements and other input materials required to make them.”
U.S. lawmakers also expressed support for Biden’s executive order and requested the president use his powers under the Defense Production Act to increase the ability to produce semiconductors in the interim.
“The U.S. was once the world leader in semiconductor manufacturing, but our position has since significantly eroded compared to international competitors,” wrote U.S. Senators Marco Rubio (R-FL) and Chris Coons (D-DE) in a letter to Biden. “While the U.S. still maintains an advantage in semiconductor design, we have lost significant ground in semiconductor manufacturing. This loss has placed us in a precarious position, in which U.S. companies are faced with the prospects of relying on foreign suppliers to produce critical national security assets.”
One of those suppliers might be Huawei, which praised Biden’s executive order in an unexpected show of support. Huawei was banned under the Trump administration from buying American-made chips as part of greater national security concerns about the China-based company.
“It seemed like Huawei was a distraction while the U.S. wasn’t doing enough to address real cybersecurity supply-chain risk…and not doing enough to make sure America can build the competitive lead that America has over China and technology innovation,” said Huawei CSO Andy Purdy in an interview with The Washington Post.
Those hopes may be short lived, however, as U.S. Senate Majority Leader Chuck Schumer (D-NY) directed lawmakers to create a legislative package to boost the U.S. tech sector and curb China’s influence.
“Today on our caucus call, I directed the chairs and members of our relevant committees to start drafting a legislative package to out-compete China and create new American jobs,” Schumer said in a press conference.
Reuters reports that part of the legislative package may include providing emergency funding to semiconductor programs that were included in the National Defense Authorization Act—passed in 2020.
“I want this bill to address America’s short-term and long-term plan to protect our semiconductor supply chain and keep us No. 1 in AI, 5G, quantum computing, biomedical research, storage, all of these things are part of the bill,” Schumer said.
