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Comprehensive semiconductor supply chain review planned by US government

Following nearly six months of profound availability constraints, the US government is about to assess semiconductor, battery, and rare earth metal supply chains for inefficiencies and national security concerns.

The assessment will analyze the “resiliency and capacity of the American manufacturing supply chains and defense industrial base” to support areas like national security and emergency preparedness, according to a draft executive order seen by CNBC. The review will be carried out by Biden’s economic and national security teams.

According to the draft order, the Biden Administration plans to review gaps in domestic manufacturing and supply chains that are currently dominated or rely on “nations that are or are likely to become unfriendly or unstable.”

The executive order is being finalized, and the White House could change the actual text of it by the time it’s implemented.

The review will take place in two parts. The first phase will comprise a 100-day review of supply chains for high-priority items like semiconductors, batteries, and medical supplies. The second phase will broaden the review to sectors, including public health, energy, and transportation.

A year after the order is issued, the team will submit an analysis and recommendations on potential actions to take. Those could include trade route edits or diplomatic agreements.

Analysts expect relations with China to normalize under President Biden. That’s after a four-year trade war between China and the U.S. that was marked by tariffs and export bans.

Although the executive order doesn’t specifically mention China, President Biden said that his administration was readying itself for “extreme competition” with the country. The order would be one of Biden’s first tangible efforts to shore up both American economic and defense interests.

Meanwhile, Apple is reportedly in the midst of diversifying its supply chain and moving some of its manufacturing outside of China. The Cupertino tech giant’s supply chain and production processes are highly dependent on China, an issue underscored by the pandemic.

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