US lawmakers should prioritize automotive chip needs – industry

WASHINGTON: The US auto industry and United Auto Workers union on Friday urged Congress to tie billions of dollars in government funding to boost semiconductor production to the needs of automakers forced to slash production because of chip shortages.

Congress "should prioritize production of the semiconductors necessary to assemble vehicles here in the United States. This will ensure that motor vehicle manufacturers have a fair share of chips needed to meet consumer demand," said the American Automotive Policy Council, Motor & Equipment Manufacturers Association and UAW on Friday in a joint statement.

The Bureau of Labor Statistics said the US motor vehicle and parts sector lost 27,000 jobs in April as automakers have cut production and laid off workers due to chip shortages.

The letter seen by Reuters said the U.S motor vehicle industry is estimated to have lost over 330,000 production units as a result of the crisis.

Carmakers across the world have had to curb output, hampering their attempts to recover from the COVID-19 pandemic, due to a shortage of vital chips used in everything from computer management of engines to driver assistance systems.

Automakers have warned the chips crisis could last until 2022 and have pressed the Biden administration and Congress to take action.

Ford Motor Co last week warned the shortage may slash second-quarter production by half. It said the ongoing chip shortage would cost it about $2.5 billion and about 1.1 million units of lost production in 2021.

President Joe Biden has proposed $50 billion to boost US semiconductor production.

The letter said "the most effective way to mitigate that risk would be to include specific funding for semiconductor facilities that commit to dedicating a portion of their capacity to motor vehicle-grade chip production."

Tech companies have repeatedly urged the administration not to pick "winners and losers" or attach conditions to funding.