The microchip shortage continues: U.S. Senator from NJ wants to end it

For months we’ve been hearing about a shortage of microchips for automobiles that has delayed the delivery of new cars and trucks and sent prices soaring.

A lawmaker from New Jersey is pushing a plan to address the issue once and for all.

During a visit to the Port of New York and New Jersey, U.S. Sen. Bob Menendez, D-N.J., urged Congress to pass the CHIPS Act, legislation that would provide $52 billion in subsidies to incentivize domestic computer chip manufacturing and semiconductor production, while decreasing dependence on foreign manufacturers.

Supply chain nightmares

When the pandemic began, lockdowns in China and other nations created a shortage of microchips that has contributed significantly to supply chain delays and price increases in the U.S.

Menendez said these chips are used in practically everything we depend on “from our cell phones to our washing machines, refrigerators to cars and defense systems just to mention a few.”

He said when we have this kind of a chip shortage, “we see parking lots full of brand new vehicles, cars ready to be sold, but they can’t roll off the lot because they don’t have a microchip the size of your fingernail.”

Menendez said with economic indicators suggesting rising car prices are responsible for a third of domestic inflation, “improving our ability to produce and manufacture chips domestically has a direct link to reducing long-term inflation costs.”

China gets the last laugh

He said shortages of microchips grind industries and businesses to a halt and leave our adversaries like China “with the last laugh.”

He noted in the 1990s we used to produce nearly 40% of all microchips in America but in recent years that has dropped to 12%.

He said the CHIPS Act also calls for the creation of a real-time supply chain database that will track inventories and production capabilities, which will help prevent future supply chain disruptions.

Menendez said through this legislation, “we address vulnerabilities in our supply chains, we boost our domestic manufacturing capacity and we better prepare our nation’s economy for the 21st century.”

In addition to providing subsidies, the CHIPS Act also creates a 25% investment tax credit for investments in semiconductor manufacturing and includes incentives for the manufacturing of semiconductors, as well as for the manufacturing of the specialized tooling equipment required in the semiconductor manufacturing process.

David Matthau is a reporter for New Jersey 101.5. You can reach him at david.matthau@townsquaremedia.com

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