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Auto groups repeat call for government help on chip shortage at multi-industry forum

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Auto industry groups are reiterating a call for government intervention to address the global semiconductor shortage during a virtual forum Thursday on supply chain risks that includes remarks from a broad swath of stakeholder industries and analysts.

Executives from the Alliance for Automotive Innovation and the Motor & Equipment Manufacturers Association are both speaking at the conference, which is being held by the U.S. Commerce Department’s Bureau of Industry and Security to address policy objectives and concerns over President Joe Biden’s executive order on supply chains.

The auto industry’s latest call for federal support comes after the alliance submitted comments on Monday to the Commerce Department, urging the government to dedicate a portion of funding under the proposed Chips for America Act to auto sector needs.

“This could be accomplished by, for example, specifying that a particular percentage — that is reasonably based on the projected needs of the auto industry — be allocated for facilities that will support the production of auto-grade chips in some manner,” wrote John Bozzella, CEO of the alliance, which represents most major automakers in the U.S. as well as some suppliers and tech companies.

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Autos Drive America, a trade association that represents the U.S. operations of international automakers, in separate comments to the department, also requested that “any efforts to increase domestic semiconductor chip production keep supply chains diversified — with multiple sourcing options here and abroad.”

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The supply shortage has forced automakers including Ford, General Motors and Volkswagen to pause or limit production and cancel shifts in North American plants. The shortage could result in 1.28 million fewer vehicles built this year and disrupt production for another six months, according to the alliance.

In prepared remarks Thursday, the alliance restated its support for “full and robust funding” for the programs authorized under the proposed bill as well as policies that incentivize additional semiconductor manufacturing in the U.S.

The alliance also calls for a semiconductor manufacturing investment tax credit that can “help companies offset the cost of creating new lines within existing facilities or reallocating current production to meet evolving needs.”

“Our immediate priority, and one that we appreciate is shared by the administration, is reducing the severity and longevity of the microchip shortage for the auto industry to protect American jobs and minimize the negative impact to the broader economy,” Bozzella was expected to say during his remarks.

The Motor & Equipment Manufacturers Association also is asking the administration for “specific motor vehicle chip production incentives.”

“Any U.S. government supply chain incentives for research, development and production must apply to the semiconductor needs of both the semiconductor and motor vehicle parts-manufacturing sectors,” the group wrote in its comments to the Commerce Department.

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Biden has said he is pushing for $37 billion to fund measures included in this year’s National Defense Authorization Act that could boost semiconductor manufacturing capacity.

The White House is hosting a virtual meeting on Monday to discuss supply chain issues. The meeting is expected to include Ford CEO Jim Farley and GM CEO Mary Barra, according to a Reuters report.

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