In typical American fashion, the government has decided that the best way to fix the recent computer chip shortage is to throw more money at it.
Yup, and there are a few different culprits behind it. It seems that the need for computer chips began to rise during the beginning of the pandemic as droves of Americans began to work from home, creating the need to setup home offices. At the same time, some major computer chip factories in Asia were forced to shut down due to Covid-19 lockdowns, threatening American imports from the region. Other factors like severe winter weather, fires at factories, and even a neon shortage fueled by the Ukrainian-Russian war are all causing production issues.
The shortage is incredibly problematic on multiple fronts. These chips are found in everything from cars, to smartphones, to washing machines, to different lifesaving medical devices. In a report earlier this year, the Department of Commerce found that the demand for computer chips rose 17% from 2019 to 2021, and the current production and supply is simply not meeting this figure. “This is a major supply and demand mismatch,” the report reads, and that’s compounded by the fact that the United States only produces 12% of the world’s supply of computer chips.
There are currently two bills in Congress that the government hopes will lessen the impact of the current shortage. Last year, the Senate passed the U.S. Innovation and Competition Act while the America COMPETES Act passed in the House in February 2022. Both measures have some major similarities—notably some hefty funding for domestic chip manufacturing and research—but negotiations are still being hammered out before any legislation reaches President Biden’s desk for a signature.
The Associated Press is reporting that there are some major points of contention between the bills. The House bill is allocating $45 billion to improve America’s supply chain issues, while there is no such provision in the Senate’s bill. Both the House and the Senate will need to make some concessions in order to get some package out of Congress, and their incentive to do so could be to stir up whatever goodwill they can ahead of the upcoming November midterm elections.