Awaiting Funding, Chips for America Act to Invest $52 Billion in U.S. Chip Manufacturing

Amid an ongoing semiconductor shortage that continues to significantly impact the ability to complete vehicle builds for automotive and fleets, automobile industry leaders and unions have linked up to push Congress to move on the Chips for America Act.

Although already signed into law on June 8 as part of the 2021 defense bill, the $52 billion measure has never received money from Congress. In July, several groups and unions including the Alliance for Automotive Innovation and the UAW sent a letter urging lawmakers to provide funding for the measure immediately.

The Act dedicates $52 billion to the research of semiconductors, the modernization of current manufacturing facilities, and funding for the construction of new facilities in the United States, calling the investment “a national priority.”

Currently, Taiwan holds the largest share of global semiconductor manufacturing at 22%, followed by South Korea at 21%, and China ­­and Japan at 15% each, according to the Semiconductor Industry Association. The United States holds only 12% of the global manufacturing capacity of semiconductors, down from 37% in 1990.

Although the lack of American semiconductor manufacturing and the shortage is not new, the past year has exacerbated an already serious problem. A pause in global manufacturing during the onset of the COVID pandemic, hesitation in microchip orders by auto manufacturers, and a fire at a major Japanese manufacturing plant in March 2021 have worsened a problem that has been looming for over two decades.

Impact on Fleets

While the shortage has put a halt to lines in auto plants, it’s created an even worse lag for fleets awaiting chassis builds. According to Merchants Fleet, lead times for chipmakers have jumped from 10 weeks to 17 weeks, which has resulted in fleet managers waiting up to 9 months for builds.

According to Fleet Equipment, Class 8 builds have dropped to 967 units her day, the lowest per-day build rate in six months. Many OEMs have also already closed orders for 2022 models, which means managers need to work even further ahead to anticipate needs.

“For our fleet customers, this shortage has made a difficult season more challenging,” said SCL General Manager Travis Becktel. “On top of dealing with a shortage of drivers they now have to contend with long wait times and delays in updating their fleets and acquiring new vehicles. The key to weathering this storm, which we know has no quick fixes, is to plan and then act decisively when it’s time. Make sure you have a preventative maintenance plan in place to ensure the vehicles you have are working properly, explore products that will keep them operating at their peak for longer, and use the tools we have at our discretion to find and address problems before they create other, larger issues.”

Merchant Fleet also recommends exploring alternative models and OEMs to minimize wait times, pre-order vehicles, and take small steps like cutting back on spare key requests (key fobs also use semiconductors).

“Regardless of when Congress funds the Chips for America Act, the semiconductor shortage and all of the challenges it creates for our partners in the automotive and trucking industries aren’t going away anytime soon,” Becktel said. “The good news is we have experts on hand to help our partners navigate difficult seasons like this, provide the utmost care for the vehicles they do have on hand, and come up with some creative solutions to help them keep their businesses moving in the interim.”

Contact an SCL Consultant today 

In a wide range of automotive, industrial and commercial sectors, SCL remains steadfast on its commitment to product and industry knowledge, performance satisfaction and superior logistics. We protect and optimize the machines that keep our country moving. For more information on how we help can help with services including bulk purchasing or managing inventory, contact an SCL expert today.