President Joe Biden on Friday opened his Asia trip by highlighting one of the biggest issues plaguing western nations, the computer chip shortage, which has had a huge affect on the world economy, not to mention the tech markets. Biden will grapple with a multitude of foreign policy issues during a five-day visit to South Korea and Japan, but he also crafted an itinerary clearly meant to tend to the concerns of his home audience as well. As reported by the AP:
The Samsung visit was a nod to one of Biden’s key domestic priorities, which is increasing the supply of computer chips
PYEONGTAEK, South Korea (AP) — President Joe Biden on Friday opened his Asia trip by highlighting the computer chip shortage that has bedeviled the world economy, touring a Samsung computer chip plant that will serve as model for a $17 billion semiconductor factory the Korean electronics company plans to open in Texas.
The Samsung visit was a nod to one of Biden’s key domestic priorities: increasing the supply of computer chips. A semiconductor shortage last year hurt the availability of autos, kitchen appliances and other goods, causing higher inflation worldwide and crippling Biden’s public approval among U.S. voters.
Biden will grapple with a multitude of foreign policy issues during a five-day visit to South Korea and Japan, but he also crafted an itinerary clearly meant to tend to the concerns of his home audience as well. The president noted that the Texas plant would add 3,000 jobs and the construction would include union labor.
“These little chips,” Biden said in remarks at the plant, “are the key to propelling us into the next era of humanity’s technological development.”
Greeting Biden at the plant in South Korea was the country’s new president, Yoon Suk Yeol, and Samsung Electronics Vice Chairman Lee Jae-yong. Yoon is a political newcomer who became president, his first elected office, slightly more than a week ago. He campaigned on taking a tougher stance against North Korea and strengthening the 70-year alliance with the U.S.
Yoon said in a speech before Biden spoke that he hopes the countries’ partnership evolves into an “economic and security alliance based on cooperation in advanced technology and supply chains.”
The chip plant showed the unique nature of manufacturing as visitors were required to don laboratory coats and blue booties to help keep the facility clean. Biden and Yoon, who did not wear protective clothing, saw a demonstration of the machinery.
At one point during his tour, Biden received an in-depth explanation of a KLA inspection system on the Samsung plant floor. The California-based company is a major supplier to Samsung’s semiconductor operations. After a worker named Peter explained the ins and outs of the machinery, Biden quipped, “Don’t forget to vote,” when he returns home to the United States.
Part of the computer chip shortage is the result of strong demand as much of the world emerged from the coronavirus pandemic. But coronavirus outbreaks and other challenges also caused the closure of semiconductor plants. U.S. government officials have estimated that chip production will not be at the levels they would like until early 2023.
Global computer chip sales totaled $151.7 billion during the first three months of this year, a 23% jump from the same period in 2021, according to the Semiconductor Industry Association.
More than 75% of global chip production comes from Asia. That’s a possible vulnerability the U.S. hopes to protect against through more domestic production and $52 billion worth of government investment in the sector through a bill being negotiated in Congress.
The risk of Chinese aggression against Taiwan could possibly cut off the flow of high-end computer chips that are needed in the U.S. for military gear as well as consumer goods. Similarly, the hermetic North Korea has been test-firing ballistic missiles amid a coronavirus outbreak, a possible risk to South Korea’s manufacturing sector should the brinksmanship escalate.
In terms of chip production, China leads the global pack with a 24% share, followed by Taiwan (21%), South Korea (19%) and Japan (13%). Only 10% of chips are made in the U.S., according to the Semiconductor Industry Association.
Samsung announced the plant in Taylor, Texas in November 2021. It hopes to begin operations in the second half of 2024. The South Korean electronics giant chose the site based on a number of factors, including government incentives and the “readiness and stability” of local infrastructure.
The White House said in a fact sheet issued Friday that semiconductor companies have announced nearly $80 billion in U.S. investments through 2025. That sum includes $20 billion for Intel’s plant outside Columbus, Ohio, up to $30 billion by Texas Instruments, a $1 trillion expansion by Wolfspeed in North Carolina and investments by Global Foundries and SK Group.
By AAMER MADHANI and JOSH BOAK
