Opinion: The Semiconductor Shortage – WSJ

A global computer chip shortage has constrained worldwide production of goods from iPhones to Sony PlayStations to Ford trucks. President Biden has called for $37 billion from Congress to boost U.S. semiconductor manufacturing, but government industrial policy isn’t needed to correct this supply-demand problem.

A new executive order mandates a 100-day review of supply chains for semiconductors and three other “critical” products including electric-car batteries. “Resilient, diverse, and secure supply chains are going to help revitalize our domestic manufacturing capacity and create good-paying jobs, not $15 an hour—which is what we need to do someday,” Mr. Biden said.

Secure and resilient supply chains are important, but the President is trying to exploit domestic manufacturing problems to promote industrial policy as Donald Trump did with steel and aluminum tariffs.

The economic backdrop for Mr. Biden’s order is a chip shortage that has idled auto plants in the U.S. and abroad. Cars have become like smartphones on wheels and can include thousands of chips—electric vehicles even more. IHS Markit recently projected the shortage will affect global production of a million vehicles in the first quarter.

Governments helped create the chip shortage, starting with their lockdowns last spring. Auto makers reduced orders for new chips as car purchases plunged. They didn’t anticipate how demand for cars would rebound, fueled by trillions of dollars in government spending and near-zero interest rates. Germany and China also increased electric-vehicle subsidies.