White House ramps up effort to tackle automotive chip shortage

February 17, 2021 11:18 PM EST

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By David Shepardson

WASHINGTON (Reuters) - Top economic and national security officials in the White House have ramped up efforts to help the U.S. auto industry fight a growing shortage of semiconductor chips that has forced production cuts worldwide, a White House spokeswoman said.

The administration of President Joe Biden has held meetings with automotive companies and suppliers to identify chokepoints and urged companies to work cooperatively to tackle the shortage, the spokeswoman said on Wednesday.

The White House has also tasked U.S. embassies with identifying how foreign countries and companies that produce chips can help resolve the global shortage and working with international partners and allies, urging them to deal with the current shortfall.

The effort includes outreach to Taiwan, home of key chip maker Taiwan Semiconductor Manufacturing Co Ltd (TSMC), to find ways to resolve the shortage.

In a Feb. 17 letter, Biden's top economic adviser, Brian Deese, thanked Taiwan's Economic Affairs Minister Wang Mei-hua for working to help to resolve the shortage in coordination with the island's manufacturers.

Along with Deese, White House National Security Advisor Jake Sullivan is involved in the effort, as are other senior aides.

This month, U.S. officials held a meeting with Wang in which the United States thanked Taiwan for help on resolving the auto chip shortage, she said.

The White House spokeswoman said officials recognize steps must be taken to avoid future shortages, which is why the administration is launching a comprehensive review of critical supply chains to identify vulnerabilities and take steps like spurring increased U.S. domestic production.

General Motors Co on Feb. 9 said the global chip shortage could shave up to $2 billion from 2021 profits and extended production cuts at three North American plants. It also said it would partially build and later finish assembling vehicles at two other factories because of the chip shortage.

No. 2 U.S. automaker Ford Motor Co warned this month the chip shortage could lead to a 10% to 20% loss in first-quarter production, resulting in a potential hit to operating earnings of $1 billion to $2.5 billion. It had said it lost some production of its top-selling F-150 pickup truck.

A shortage of auto chips could affect nearly 1 million units of global light vehicle production in the first quarter, data firm IHS Markit said Tuesday, adding that it still expects most of the volume to be recovered in the remainder of 2021.

In a Jan. 19 letter to Deese first reported by Reuters, the United Auto Workers union and auto trade groups asked the Biden administration to consider "urging major silicon wafer foundries to ramp up production of automotive grade wafers."

The chip shortage has affected many other automakers, including Toyota Motor Corp, Volkswagen AG, Stellantis NV, Renault, Subaru, Nissan Motor, Honda Motor and Mazda Motor Co.

(Reporting by David Shepardson; Editing by Clarence Fernandez and Gerry Doyle)

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