Even coming off its fastest annual growth in 37 years, the U.S. economy is still bogged down by a persistent shortage of the computer chips essential to the technology that connects, transports and entertains us.
The problem has been building since pandemic-related lockdowns shut down major Asian chip factories more than two years ago. Now it threatens to extend into the indefinite future, despite the semiconductor industry’s efforts to catch up with demand.
The House of Representatives passed a bill Feb. 4 that could pump $52 billion in grants and subsidies to the semiconductor industry to help boost U.S. production – a top Biden administration priority that must now be reconciled with a Senate version passed eight months ago. The European Union revealed its own $48 billion plan Tuesday to boost microchip production within the 27-nation bloc.
The shortages have exasperated consumers who can’t find the new vehicles they want at depleted auto dealerships, forcing some to settle for used vehicles selling for abnormally high prices. Unable to secure all the microprocessors needed for today’s cars, the auto industry closed some plants and wound up making about 8 million fewer vehicles last year than initially anticipated, driving up prices and fueling inflation, according to U.S. Commerce Secretary Gina Raimondo.
The inadequate supply of processors also has delayed production of life-saving medical devices, smartphones, video game consoles, laptops and other once widely available modern-day conveniences that have become scarcer during the past year.