“It’s a huge problem,” Commerce Secretary Gina Raimondo told CNN ahead of leading a White House meeting with manufacturers and users of computer chips. “Everything in your life that has an on-off switch requires semiconductors. Your phone, your car, all of 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 took our eye off the ball. We used to lead the world in semiconductor manufacturing and now we don’t. We just disinvested.”
“It’s pretty simple. We need to make more chips in America,” Raimondo said.
Chip shortage means ‘higher prices and fewer options’
Raimondo acknowledged the semiconductor problems will pose a challenge this holiday shopping season, when demand soars for smartphones, tablets, video game consoles, personal speakers and other gadgets.
“Hopefully it won’t be horribly felt,” she said, adding that electronics companies have been mostly able to keep up with demand. “But it will be more of what we’re seeing: Essentially higher prices and fewer options.”
‘We’ve never seen this’
The auto industry is feeling the brunt of the pain from the chip shortage.
Hit by production outages, car dealerships have few vehicles in inventory and consumers are paying more for cars they can find.
Take for instance one Ford dealership in Mahwah, New Jersey, that normally has 300 new cars on its lot. Today it has only about a dozen because of the production outages.
“We’ve never seen this. It’s definitely a first for all of us,” Aaron Ringus, sales manager at Mahwah Ford, told CNN earlier this month.
Raimondo: Chip shortages will last until at least late 2022
Federal Reserve Chairman Jerome Powell cited the chip shortage as one of the many challenges facing the US economy as it reopens from the pandemic.
Unfortunately, semiconductor supply issues aren’t likely to go away anytime soon.
“Honestly I think we’re going to be struggling with it well into next year until we can really smooth out some of these bottlenecks,” Raimondo said. “It’s not going to be this bad, but I don’t think it will be back to normal until well into 2022.”
Raimondo conceded that timeline is “not out of the question,” adding that officials are “going to work hard to do better than that.”
‘We’re asking nicely’
Biden officials are also launching a rapid response hotline that will allow companies to immediately alert the government of disruptions caused by Covid outbreaks, extreme weather or wildfires.
“We need more information about what’s going on, where are the chips going, where are the bottlenecks, so we can predict problems before they happen,” Raimondo said.
During the summit, the Commerce Department said Raimondo warned industry executives she might invoke the Cold War-era Defense Production Act to compel them to share information if they don’t do so voluntarily.
“Now at this point, it’s voluntary. We’re asking nicely and hopefully they comply,” Raimondo said. “If they don’t, we’ll have to take a tougher stance.”
– CNN Business’ Chris Isidore contributed to this report.
