White House: Semiconductor shortage could lead to 1 percentage point drop in U.S. GDP in 2021

On April 6, the White House held a confidential briefing with some members of Congress to discuss the potential risks to the U.S. economy from semiconductor supply chain issues. The White House is pushing Congress to allocate $52 billion to subsidize semiconductor production.

White House chief economic adviser Brian Deese told the media: "The most optimistic estimate is that semiconductor supply shortages could reduce gross domestic product (GDP) by a full percentage point in 2021." , provides the latest analysis from the intelligence community and the Department of Defense on core vulnerabilities and risks posed by the semiconductor supply chain to the U.S. economy and national security.

The White House said Commerce Secretary Gina Raimondo, Deputy Defense Secretary Kathleen Hicks, and National Security Assistant Jake Sullivan participated in the briefing "to discuss the urgent need to invest in U.S.-made semiconductors, as well as to protect our economy and our nation. Safe research and development.”

Ongoing chip shortages have disrupted production in the auto and electronics industries, forcing some companies to scale back production. There are growing calls to reduce reliance on other countries' semiconductors.

"Severe disruptions to our semiconductor supply could cause historic damage to the U.S. economy far greater than the current chip shortage is affecting the U.S. auto industry, and will diminish our technological competitiveness and military advantage over global adversaries," the White House said. "

Currently, the White House is pushing Congress to allocate $52 billion to subsidize semiconductor production and has been urging Congress to approve the subsidy.

"The risks are enormous," Deese said of the severe disruption to the U.S. economy. He also referred to "economic moves by key competitors - especially by China around escalating vulnerabilities to the semiconductor issue".

A Commerce Department analysis prepared for the briefing noted that semiconductor fabs will take years to build and "there is no quick fix in an emergency,". In addition, the report notes that private sector investment in U.S. chip production has not been sufficient, nor “insufficiently mitigate risks associated with current U.S. supply chain vulnerabilities.”