Commerce continues engagement with semiconductor industry
White House policymakers call on Congress to bolster supply chains


In late September, the Biden administration took a variety of actions to address the ongoing global semiconductor shortage and the various supply chain disruptions caused by the covid-19 pandemic. This included convening a White House meeting with key players in the semiconductor industry, issuing a request for information (RFI) to the industry on the chip supply chain, and calling on Congress to help bolster domestic semiconductor supply chains and domestic industrial capacity.

In summary:

Commerce continues engagement with semiconductor industry

On 23 September 2021, the secretary of commerce, Gina Raimondo, and the national economic council director, Brian Deese, convened a White House meeting with major semiconductor manufacturers and customers, where they "discussed the progress industry has made to address supply chain challenges and increase supply chain transparency". The meeting, which was the third such gathering convened by the Biden administration, was held in concert with an assertive move by the Department of Commerce to gather information on the semiconductor industry.

Specifically, on 24 September 2021, the Department of Commerce's bureau of industry and security (BIS) – the agency primarily responsible for regulating dual-use and some military exports – released an RFI calling for US and non-US entities throughout the semiconductor supply chain to share information about their production practices, capacity, inventories and market demand, as the BIS seeks to formulate strategies for combatting the global chip shortage. The RFI sought information "[w]ith the goal of facilitating the flow of information across the various segments of the supply chain, identifying data gaps and bottlenecks in the supply chain, and potential inconsistent demand signals".

The RFI also contained two sets of questions. The first set of questions was directed at "semiconductor product design, front and back-end manufacturers and microelectronics assemblers, and their suppliers and distributors". These questions sought information on, among other things:

  • sales and inventories from the years 2019 and 2020, as well as an estimate for 2021;

  • which semiconductor products have the largest order backlogs and sales of those products; and

  • data on product fabrication and package or assembly locations, as well as the top three customers for those products.

The second set of questions targeted semiconductor end users, from whom the BIS requested information on:

  • the semiconductor products they are having difficulty acquiring;

  • their 2019 and 2020 purchases of those products, as well as average monthly orders for 2021; and

  • the quantity of those products they would purchase over the next six months "barring any production constraints".

The BIS also requested information in both sets of questions on the primary bottlenecks faced by the relevant entities and "[w]hat single change (and to which portion of the supply chain) would most significantly increase" the entities' ability to supply or purchase semiconductors in the next six months.

Secretary Raimondo's public comments indicate that the Department of Commerce expected industry to cooperate with the RFI and provide useful supply chain data. Raimondo's comments also show frustration with the perceived lack of cooperation from the industry thus far. In a 23 September 2021 interview with Bloomberg, Raimondo said the Biden administration is considering invoking the Defense Production Act to compel companies in the semiconductor supply chain to provide the information Raimondo seeks.

White House policymakers call on Congress to bolster supply chains

Sameera Fazili, the deputy director of the National Economic Council, and Peter Harrell, who serves as senior director for international economics and competitiveness at the National Security Council, also joined the overall effort, writing in a White House blog post, published on 23 September 2021, that the information provided in response to the RFI could "provide a clear demand signal that can attract more private investment to expand capacity to resolve the shortage". The blog post also covers the steps that the Biden administration has taken and will take to address supply chain shocks caused by covid-19 and the global chip shortage. It also calls on Congress to help alleviate the shortage. Fazili and Harrell wrote that the administration has "been working with foreign governments in Southeast Asia and elsewhere to keep critical factories up and running" and will set up a "new early alert system for COVID-related shutdowns to microelectronics manufacturing around the world" that "will allow us to detect potential disruptions earlier" and support faster solutions in coordination with trading partners and the private sector.

Regarding Congress, Fazili and Harrell wrote that there are two steps lawmakers can take to "accelerate our progress towards more resilient supply chains". First, they ask that Congress "fund the bipartisan CHIPS for America Act, which would enable transformative investments in domestic semiconductor research, design, and manufacturing". Second, they said Congress should "establish the new Critical Supply Chain Resiliency Program (CSCRP) at the Department of Commerce", as called for in President Biden's build back better plan. The programme would:

serve as a central node in the federal government for supply chain resilience, facilitate better coordination and planning across federal agencies to address vulnerabilities, and invest in critical supply chains where the private market has failed to allocate sufficient capital.

The CSCRP has not yet been authorised or funded by Congress. However, after a complex multi-committee process, on 8 June 2021, the Senate advanced the United States Innovation and Competition Act (USICA), which would, among other things, create a supply chain resilience programme with broad authority. In fact, under the senate-passed bill, this new programme would also incorporate the CHIPS for America Act's centrepiece effort to incentivise domestic manufacturing of semiconductors. While USICA has apparently stalled on the House side, it may come back to life later this year or early next year.

Meanwhile, the House's massive budget reconciliation package, which would implement President Biden's build back better agenda, contains a provision written by the House Committee on Energy and Commerce that would provide relevant funding. The bill, which is now under consideration, would appropriate $10 billion over five years for a seemingly related programme to allow the Department of Commerce to provide grants to domestic enterprises, manufacturers, regional and technology hubs, and other entities in order to shore up US supply chains.

For further information on this topic please contact Kay C Georgi, David Hanke or John A Gurtunca at Arent Fox LLP's Washington DC office by telephone (+1 202 857 6000) or email ([email protected], [email protected] or [email protected]). Alternatively, contact Marwa M Hassoun at Arent Fox LLP's Los Angeles office by telephone (+1 213 629 7400) or email ([email protected]). The Arent Fox LLP website can be accessed at