Intel promises help for automakers as Biden works to fix chips shortage

The global chip shortage stems from a confluence of factors as carmakers, which shut plants during the Covid-19 pandemic last year

By Nandita Bose and Stephen Nellis

WASHINGTON (Reuters) -U.S. President Joe Biden met with executives from major companies on Monday to discuss the global chip shortage that has severely hurt U.S. automakers and spurred Intel Corp to announce it plans to make chips for car plants at its factories in the next six to nine months.

During the meeting, Biden said he has bipartisan support for legislation to fund the semiconductor industry. He previously announced plans to invest $50 billion in semiconductor manufacturing and research as part of his broader focus on rebuilding U.S. manufacturing included in his $2 trillion infrastructure plan.

 

Intel Chief Executive Pat Gelsinger, who attended the meeting virtually, told Reuters the company wanted to start producing chips at its factories within six to nine months to address a shortage that has idled assembly lines at some U.S. automotive plants.

The supply crunch could lead to a potential 1.3 million shortfall in U.S. car and light-duty truck production this year.

"We're hoping that some of these things can be alleviated, not requiring a three- or four-year factory build, but maybe six months of new products being certified on some of our existing processes," Gelsinger said. "We've begun those engagements already with some of the key components suppliers."

Intel last month announced plans to vastly scale up chips manufacturing for outsiders as it builds new factories in the United States and Europe. Its talks with automotive suppliers disclosed on Monday represent an acceleration of those plans.

The White House meeting included executives from 19 major companies including General Motors Chief Executive Mary Barra, Ford Motor CEO Jim Farley and Chrysler-parent Stellantis NV CEO Carlos Tavares. It was also attended by White House national security adviser Jake Sullivan, National Economic Council Director Brian Deese and Commerce Secretary Gina Raimondo.

"Today I received a letter from 23 senators, bipartisan and 42 House members, Republican and Democrat, supporting the chips for America program," Biden said at the top of the session.

Executives from companies such as GlobalFoundries, Taiwan Semiconductor Manufacturing Co, AT&T, Samsung Electronics Co and Google-parent Alphabet Inc also were in attendance.

White House Press Secretary Jen Psaki told reporters that no immediate decision or announcement on alleviating the chips shortage was likely to come from the meeting.

She described it as a time for the president "to hear directly from companies about the impacts, what would help the most through this period of time."

Automakers have been hit particularly hard by the global chip shortage after many canceled orders when their plants were idled by the coronavirus pandemic.

When they were ready to resume production, they found chipmakers were busy fulfilling orders for the consumer electronics industry, which has seen demand for premium devices - both for work and leisure - boom as people spent more time at home.

Over the weekend, GM canceled more truck production shifts at two U.S. plants.

Broadband internet, cellphone and cable TV companies also face delays in receiving "network switches, routers, and servers," according to an industry group.

Later this week, the Senate Commerce Committee will hold its first hearing on a bipartisan measure to bolster technology research and development efforts in a bid to address Chinese competition.

"Trying to address supply chains on a crisis-by-crisis basis creates critical national security vulnerabilities," national security adviser Sullivan said in a statement.

(Reporting by Nandita Bose; Additional reporting by Steve Holland, Andrea Shalal and David Shepardson, Editing by Rosalba O'Brien, Bill Berkrot and Jonathan Oatis)