For months, we’ve been hearing about a shortage of automotive microchips that has delayed the delivery of new cars and trucks and driven up prices.
A New Jersey lawmaker is proposing a plan to fix the problem once and for all.
During a visit to the Port of New York and New Jersey, U.S. Senator Bob Menendez, DN.J., urged Congress to pass the CHIPS Act, legislation that would provide $52 billion in subsidies to encourage manufacturing of computer chips and the production of semiconductors, while reducing dependence on foreign manufacturers.
Supply chain nightmares
When the pandemic began, lockdowns in China and other countries created a shortage of microchips that contributed significantly to supply chain delays and higher prices in the United States.
Menendez said these chips are used in virtually everything we depend on “from our cell phones to our washing machines, from refrigerators to cars and defense systems to name a few.”
He said that when we have this kind of chip shortage, “we see parking lots full of new vehicles, cars ready to be sold, but they can’t get out of the parking lot because they don’t have a microchip the size of your fingernail.”
Menendez said that with economic indicators suggesting that rising car prices are responsible for a third of national inflation, “improving our ability to produce and manufacture chips domestically has a direct with the reduction of long-term inflation costs”.
China has the last word
He said microchip shortages were crippling industries and businesses and leaving our adversaries like China “with the last word”.
He noted that in the 1990s we produced almost 40% of all microchips in America, but in recent years that percentage has dropped to 12%.
He said the CHIPS Act also requires the creation of a real-time supply chain database that will track inventory and production capacity, which will help prevent future supply chain disruptions. .
Menendez said that through this legislation, “we are fixing vulnerabilities in our supply chains, strengthening our domestic manufacturing capacity, and better preparing our country’s economy for the 21st century.”
In addition to providing subsidies, the CHIPS Act also creates a 25% investment tax credit for investments in semiconductor manufacturing and includes incentives for semiconductor manufacturing, as well as manufacture of specialized tooling equipment required in the semiconductor manufacturing process.
David Matthau is a reporter for New Jersey 101.5. You can reach him at [email protected]
Click here to contact an editor about a comment or correction for this story.
WATCH: These are the 50 largest retailers in America
WATCH: 31 jaw-dropping images from the NASA Public Library