Tom Linebarger, Cummins chairman and CEO, told investor analysts he expects the semiconductor shortage to continue into next year, while calling on increased domestic production of semiconductors to provide some supply chain certainty for car and engine makers.
“The thing we really needed in the U.S of course, as we need, we need domestic semiconductor production that’s targeted at the automotive industry,” Linebarger said in a conference call Tuesday. “I don’t mean to be pie in the sky about it, but strategically, it’s kind of a nightmare that we only have. All those semiconductor wafers are coming from pretty much one factory or one set of factories in Taiwan, and that we’re a very small part of that company’s output. That’s not the ideal situation for a supply chain.”
President Joe Biden has tasked Commerce Secretary Gina Raimondo, a former Rhode Island governor, to solve supply chain issues that include the shortage of semiconductors.
To end the shortage, Raimondo must bring back production of chips as well as solar panels and batteries on the premise that these sectors are key to prosperity. Raimondo echoes Linebarger’s sentiment that the computer chip shortage will last well into next year. The White House noted in a September report that the shortage could lop a full percentage point off economic growth this year.
The United States once accounted for 40 percent of chip-making worldwide; now it’s 12 percent. The cost of making a chip in the United States is 30 percent higher than in Taiwan and South Korea.
A chipmaker must spend tens of millions of dollars on a prototype before seeing any revenue, a barrier for start-ups.
Click here to read the full story from Tom Whittaker from the Jamestown, N.Y., Post-Journal.
