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White House Weighs Invoking Defense Law To Get Chip Data (bloomberg.com) 138

The Biden administration is considering invoking a Cold War-era national security law to force companies in the semiconductor supply chain to provide information on inventory and sales of chips, Commerce Secretary Gina Raimondo said Thursday. From a report: The goal is to alleviate bottlenecks that have idled U.S. car production and caused shortages of consumer electronics and to identify possible hoarding, she said in an interview. Her team for months has sought clarity into how companies allocate their semiconductor supply. But previous meetings that convened firms from different industrial sectors haven't led to increased transparency and many companies have refused to hand over business data to the government. The Commerce Department is now asking companies to fill out questionnaires within 45 days providing supply chain information. The request is voluntary but Raimondo said she warned industry representatives that she might invoke the Defense Production Act or other tools to force their hands if they don't respond.
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White House Weighs Invoking Defense Law To Get Chip Data

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  • by Anonymous Coward on Friday September 24, 2021 @12:24PM (#61828695)

    Biden can't just wave his hand and make the chip crisis go away. It takes 12-18 months to fully re-start a fabrication plant once it has been shut down, as many were during the initial lockdowns.

    This isn't some vast conspiracy to cause supply chain disruptions or to price gouge computer chips. It's just the natural consequence JIT and Lean manufacturing, which is completely intolerant of disruption.

    • by sjames ( 1099 )

      There's little need to shut down a fab during a pandemic lockdown. They are very sparsely populated with humans on a normal day and all of them are already wearing masks, and head to toe coverings anyway.

      • by alvinrod ( 889928 ) on Friday September 24, 2021 @01:11PM (#61828945)
        A fab might need to shut down if it doesn't have the raw materials used during production. Apparently the substrate used for wafers is in short supply because those factories that produce it had to shut down or were themselves disrupted due to shortages further upstream.

        Unless they're short on something needed towards the end of the production process it shouldn't cause a massive gap in production where wafers that started production previously would need to be discarded. It just means that new wafers can't start until there are sufficient materials so that they can be finished.

        From what I've read though it was the auto manufacturers that screwed themselves by canceling orders under the assumption that their own factories would be closed. No point in having chips if you can't put them in cars. Of course the wafers they had reserved got snapped up quickly and there probably aren't any free wafers for a long while since every fab is probably backed up as is. The solution for those companies is to open the pocket books and pay off someone else to buy some of their wafer allocation. But god-forbid a major corporation not ask the taxpayers to cover for their short-sighted actions.
      • There's little need to shut down a fab during a pandemic lockdown.

        You say that, but that's not what [nikkei.com] was [reuters.com] happening [thehill.com].

        Covid-19 wasn't the only [reuters.com] reason [nikkei.com] why chip fabs [ft.com] had to shut down [bbc.com].

        • by sjames ( 1099 )

          The fire and drought issues are real enough. But the rest is as much or more due to mis-management of COVID as it is inevitable consequences of it.

    • NXP in Austin Texas did it in 3 months after the big freeze. That proves you are wrong.
    • by JBeretta ( 7487512 ) on Friday September 24, 2021 @01:04PM (#61828903)

      Biden can't just wave his hand and make the chip crisis go away. It takes 12-18 months to fully re-start a fabrication plant once it has been shut down, as many were during the initial lockdowns.

      This isn't some vast conspiracy to cause supply chain disruptions or to price gouge computer chips. It's just the natural consequence JIT and Lean manufacturing, which is completely intolerant of disruption.

      Yes & No.

      To wit: We never had a toilet paper shortage. What we had was a combination of factors that, when coupled with hoarding, caused an actual problem of distribution to end users. Vast amounts of people started staying home during the 8 hours they'd normally be at the office. What was never discussed was that about 1/3 of toilet paper sales (and I'm just using a round-number here don't pummel me on the precise fraction) are for businesses. Employees take shits at work... That toilet paper is quite often manufactured differently than toilet paper made for the home (think larger rolls and usually less "luxurious"). 1/3 of the market almost instantly snapped over to "home use". There was a lag time for the factories to slow production on industrial SKUs and switch over to residential paper (for lack of a better term).

      Most industrial toilet paper isn't sold in grocery stores like Charmin. It's sold in other places (Staples carries it, for example). Well, once the consumers noticed that some of the grocery store shelves were starting to look a little bare, and once the rumors kicked in to full gear, people started panic buying. That combination did lead to actual shortages. People were buying several months worth of TP in a single go. The supply chain isn't designed for that.

      You're spot-on about the start-up times for the fabs and JIT manufacturing. However, I've been seeing plenty of articles in the tech-industry, over the last few months, that there are companies out there that are hoarding chips. They're buying as many as they can (months of needs in one purchase) and this is leading to the same situation we had with TP (kinda). The chips the fabs are producing would be sufficient to get the ball rolling again but some companies are buying far more chips than they need right now. This is exacerbating the problem significantly.

      It's more nuanced than that, of course, but as a rough analogy....

      • This shouldn't be marked down. Manufacturers have been known to do all sorts of villainous things that make no sense to the public, but work out to their advantage where others can't see.

    • Re: (Score:3, Interesting)

      by jellomizer ( 103300 )

      As the Article stated, It is mostly informational to see if there is some hording as well to get a bigger picture of the problem.

      Also the Computer Chip industry has had a history of hording and price gouging in the past. There is a saying in business, never let a good crisis go to waste. People are scrambling to try to fix things, not thinking of the big picture, organizations not monitoring their policies and procedures... It is a big opening for a lot of quick sales at inflated prices.

      Oh gee mr so an so a

    • Also...
      Do you know JIT, and Lean Manufacturing are, or did you just take the company class which often just tosses out those acronyms so you do the steps.

      Lean would have little to do about any supply chain issues. Lean would actually be beneficial during such a crunch. As it is all about process automation, and using what you have to the best of its advantage.

      Just In Time Inventory can have a problem with the supply chain, However I have not seen a pure JIT system in place, where they have enough inventor

      • Just In Time Inventory is common practice across all industries. Just look at supermarkets. They practice JIT and there shelves were bare - before the pandemic hit - and were down right barren afterwards. They did not have enough inventory to keep up with the spike in demand. In the past, supermarkets had the inventory to handle these spikes. Not anymore.

        Inventory is a loss to investors. So many business run very lean when it comes to inventory.

        The OP was correct in this assessment.
        • Grocery stores have never stocked more than 3-5 days of stock. Food items have a shelf life and they want to rotate everything in the store every few days. You don't want something that has an expiration date of a month sitting on the shelf for 3 weeks before someone purchases it. It is all well seen in places like florida, when hurricanes hit and stores are bare within a couple days if they aren't getting new shipments in. General stores like Walmart do operate on more of a JIT principle. Walmarts really d
    • No but he can shout angrily and confusedly, to the consternation of his handlers.
    • but it would be nice if our gov't would actually do something about the supply chain issues when private industry refuses to.
    • by ehrichweiss ( 706417 ) * on Friday September 24, 2021 @02:07PM (#61829217)

      A friend works for Toyota and he explained to me in painful detail how this came about. So when the pandemic hit, the car manufacturers stopped placing orders for chips since they wouldn't be making any cars. That would explain your side of the story but then it gets even better. Many of those chip manufacturers weren't ready to shut down so they started searching for other chips they could produce, and apparently they found they could produce chips for phones, etc. and not only that, those chips had a better profit margin. So they retooled and started producing for phones. When the car manufacturers were finally ready to start up production again, the chip manufacturers had lost interest in low-profit chips so now the car manufacturers have to find a plant willing to retool and accept a low-profit chip. That's apparently what's really going on right now but if you're not an automotive insider, they seem they don't want you to know this.

    • 1) they weren't shut down. The car companies stopped production, and the foundries sold capacity to other customers, namely consumer electronics companies gearing up for work-from-home. when the car companies came back knocking, they found that they had lost their production slots.

      2) the other issue is port capacity. Ports have been shutting down or limiting off-loading due to pandemic restrictions. Fully 73 ships are sitting offshore Los Angeles, right now, waiting to get offloaded. 60 have been t

      • by djinn6 ( 1868030 )

        Those COVID restrictions don't actually exist in LA. Dock workers are considered essential and not subject to any restrictions. The official website for the Port of LA says the following [portoflosangeles.org]:

        All cargo terminals at the Port of Los Angles have remained open and operational throughout the COVID-19 pandemic. As part of America’s supply chain, port operations, manufacturing and distribution are essential and continue without interruption.

        It also points out why there's congestion:

        Ports are experiencing an unprecedented cargo surge, like never seen before. In fact, every single part of the supply chain is impacted, including ships, railroads, trucks, warehouses and distribution centers. As a result of the pandemic, American consumer purchasing increased last summer and the effects are still being felt today. Simply put, people are ordering more and more products online, and the supply chain is working in overdrive to keep up.

        Port capacity is a completely self-made problem. We have not invested in industrial infrastructure for decades and it was barely keeping up with demand to begin with. COVID pushed it over the edge.

    • by Tablizer ( 95088 )

      Biden can't just wave his hand and make the chip crisis go away.

      At least the administration could better understand the problem if the manufacturers share more. It's hard to know if the gov't can help or not without isolating and verifying the actual causes.

    • Free market.

    • Biden can't just wave his hand and make the chip crisis go away.

      As Biden's phone call with the Afghan President shows, you don't need to actually solve the problem. You merely need to manufacture the perception that you are solving the problem. That's the Biden secret sauce, manufacture the perception that you are doing something and you are good with the voters.

  • Itâ(TM)s not
    • That's kind of the point: Do it willingly, or we'll figure out a way to compel you. This is nothing new: the "carrot or stick" approach has been around as long as parents have existed.
      • Where's the "carrot"?

        "Give us what we want, so we can use it against you, or we beat you with a stick"

        • If they're doing nothing wrong, or nothing against the public good, it can't be used against them now, can it.

        • Where's the "carrot"?

          Unless something nefarious is going on, like hoarding, then increasing coordination to limit the shortage would be an obvious carrot.
          The stick is for people who refuse to admit that the carrot is even a carrot!

          • Unless something nefarious is going on, like hoarding, then increasing coordination to limit the shortage would be an obvious carrot.
            The stick is for people who refuse to admit that the carrot is even a carrot!

            "Increasing Coordination"?

            Still not a carrot.

            How would this coordination work?

            Company A has plenty of chips for their own use, but instead should sell them to competitors?

            Not a carrot.

      • And this is why certain laws, etc., need an expiry date: So that expensive teams of lawyers can't go on fishing expeditions until they finally find something that will stick.

      • by dcw3 ( 649211 )

        It's not voluntary when you're being coerced to comply. There is no carrot, only "my way or the highway".

  • Companies are allowed to work together to manage demand, because that's against anti-trust laws. The government, however, has no such rules. Until this is passed, it's perfectly logical that the government uses their power to knock loose any suppliers that are using the pandemic and shortage of chips in order to essentially price-gouge companies by limiting demand to drive prices up.
    • I think there's a typo in there, and assuming so, yes.

    • by DarkOx ( 621550 )

      No that isn't reasonable at all. Chip makers faced real costs in terms of canceled orders, having to swap in orders for other clients.

      As long as they are not illegally colluding, that is all talking to each other and saying nobody sell Ford/GM/Toyota/etc chips for less than X margin. There is absolutely nothing wrong with them choosing their customers!

      They should satisfy their existing contracts, they should prioritize the highest margin work they can get, and they should 'fire shitty customers' who cancel

  • by mykepredko ( 40154 ) on Friday September 24, 2021 @12:37PM (#61828747) Homepage

    I'm struggling to get parts together to do a build of the Jade Robot and it has been a nightmare. We have about 75% of the parts required but searching and redesigning to use available parts. It's pretty obvious that the semi manufacturers are playing fast and loose with the truth - parts I ordered from Mouser in August with October delivery are now projected to be available in February. When I complain, all I get is "You think you have it bad..." I know I'm a shmuck-nobody in terms of demand, but when I talk to friends in the automotive and aerospace industries they're getting treated exactly the same way.

    The inability to plan one part of a product (like a car) due to changing availability projections has serious ripple effects down the line and is going to make the Covid recovery much more difficult and prolonged. It's absolutely critical that the semiconductor supply situation is understood and enough with the games of broken promises.

    • Re: (Score:2, Interesting)

      Did you support the government lockdowns? Because these were the obvious outcomes that every competent economist was warning about.

      If you don't think they were wrong than just accept that nothing is made by magic elves and not getting to build your hobby robot for six months is a cost you personally bear to save humanity or whatever.

      Those morons in automotive and aerospace CANCELED their chip orders to appease the JIT bean counters and then when the pandemic wound up being mild they begged to reinstate the

      • The lockdown was just the last straw, and if we hadn't off-shored our semiconductor manufacturing decades ago this would probably be a minor inconvenience. This is the result of decades of aggregated bad policies, advanced by both the major parties.

        This is what happens when you lose control of your supply chain. Sure, it might be nice to offshore our manufacturing for cheap chips and exporting the environmental challenges, but the downside is that in situations like this, China is going to take care of Chin

        • This is the long term pain from CEO bonus and investor driven economy short term gain, minus political pay offs to achieve them.

        • by Tablizer ( 95088 )

          Part of the problem is that what's efficient under normal circumstances is not efficient under crisis. Our financial system tends not to look more than about 5 years ahead, and thus won't prepare for say once per century crisises.

          I'm not quite sure how to change this without side-effects. It would probably take experimenting since theorizing from an armchair isn't good enough: road-test everything.

      • Re: (Score:2, Insightful)

        by evil_aaronm ( 671521 )

        when the pandemic wound up being mild

        Mild? Tell that to the families of the 750,000 - and couting! - Americans alone that lost their lives.

        • Not to say the situation isn't critical, but to compare the numbers: in the last 18 months, of a population of 330 million, with a life expectancy of 80 years, one would expect over 6 million deaths. The point of the countermeasures isn't how many people died, but how many didn't die, and how many didn't have their health reduced. Sadly, nay sayers won't accept any data "which is faked anyway", and it's non trivial to come to clear numbers versus countermeasures...
      • by mykepredko ( 40154 ) on Friday September 24, 2021 @01:33PM (#61829059) Homepage

        I don't know where you got your information from but for automotive and aerospace electronics are long lead time parts and very few, if any, orders were cancelled. Electronics are relatively small value components in (road or air) vehicles that require minimal warehousing and it doesn't make any sense to cancel them especially when there are cancellation fees and the semi manufacturers pushing back because they don't want inventory on their hands. The people I'm talking to (GM, Honeywell and Boeing) never cancelled any orders and are in the same position I am in, confirmed orders are getting pushed out with no explanation and no guaranteed delivery dates.

        I expect that when the truth comes out, the semi manufacturers stopped wafer/die production (or reallocated it to GPU and DDR) fearing that they would have built unwanted devices but when the orders didn't get cancelled they were in a position where being truthful to their customers put their executives in compromised positions and the companies vulnerable to lawsuits.

        If the semi companies made bad business decisions that hurt their customers (and left the companies open to lawsuits due to broken contracts with customers) shouldn't their stock holders know the truth? If it turns out that government lockdowns were the reason for semi shortages then shouldn't that need to be understood so that the same problem doesn't happen again?

        I don't understand why you think there shouldn't be government investigations.

      • and I support more stimulus to counteract these issues and more government action to prevent them from happening again.

        We saw in Texas' power grid what happens when you leave critical infrastructure solely up to private companies: they cut costs for short term profits and any little disaster completely fucks everything and everyone.

        Customer discipline sounds great as long as you didn't lose your job over this shit.
  • "The goal is to alleviate bottlenecks" the government is going to accomplish something! By the time anything(if it ever does) comes out of this. There will most likely be a global glut of out dated not needed semi conductors or some other unforeseen outcome. And all the money will have disappeared somewhere.
  • by Arethan ( 223197 ) on Friday September 24, 2021 @12:39PM (#61828759) Journal

    The whole point of capitalism is that a free market will self optimize. You can (and should) use regulation to prevent markets from optimizing in obviously evil, inhumane, and self-destructive ways. But, it doesn't work the other way around. You can't force capitalism to work better than it already does through central planning. The "production act [being considered] gives the president broad authority to direct industrial production in crises", which makes perfect sense if you want to ensure there's enough of a particular resource at hand when the market is optimizing away from that production. However, you shouldn't expect that forcing chips be made available for the auto-industry will have a positive effect on the overall economy. If the auto-industry desperately needs these chips, they should consider paying more for them - I would be shocked if offering to pay 2x the current market rate didn't unleash an overflowing river of chip availability.

    Please don't try to manually fuck with market dynamics by hand. You can't possibly fathom all the secondary effects. You're just going to muck things up.

    • My best guess is that all they'll be able to do is fuck things up worse than they are now. Most semiconductor manufacturing went overseas decades ago, so I think it's pretty safe to assume the desired supplies simply aren't available.

      The government can scream all they want, but if China can't or won't ship the chips, it ain't gonna happen, no matter how much USG stands on the necks of the importers and distributors.

    • Yes, but what will a completely free market self-optimize to? Short term profits, at the expense of pretty much anything else.
    • we do it with our food supply. Seriously, go do some reading on how entangled our gov't here in the US is with the food supply. At no point in time do we leave something that critical up to private industry. We tried, it was called "The Dust Bowl". Massive overfarming of popular crops for short term profits meant the first minor drought left us with shortages.

      Computer chips are now as critical as food. It's time for the gov't to step in and regulate just like they did with food.
      • by DarkOx ( 621550 )

        Umm no!

        The dust bowl was technology and agricultural management problem. Most of the things the directly lead to it mono-cultures, crop areas getting to large due planting and harvest automation, over productions, have gotten FAR WORSE since the government started to tinker. What fixed it was wind blocks, crop rotation, soil reclamation technology - and yes a lot of that was USDA research and training. However if anything the situation is probably more brittle now than ever - a glypocite resistant weed (l

    • You can take your head out of your ass because this is not market dynamics playing at hand. Business that would ordinarily carry inventory, no longer do so because of investors. Investors see inventory as a loss. So businesses run lean.

      Due to capitalism businesses were not prepared for the pandemic.

      Another fun fact, capitalism crashed in 1929 and again in 2008 and it took the government, BAILING OUT capitalism to save capitalism.

      Capitalism no longer exists today because it depends on government
      • by dcw3 ( 649211 )

        No, capitalism didn't crash. It was fucked with by big government telling banks to give out sub-prime loans because of political correctness reasons.

        https://www.businessinsider.co... [businessinsider.com]

        Regulation is an important part of what capitalism should be, but this was pure stupidity on the government's part.

  • So what's the Biden administration going to do with this data? Force reallocation?

    That probably isn't legal, because we're not really in any kind of national emergency.

    • Just because you aren't used to proactive crisis management because it isn't the Trump way of doing things, and maybe learning from shit agile practices, doesn't mean this isn't to address a national emergency. The best way to manage it is to make sure it doesn't get any worse. And better yet not to happen at all. That's good management. And for the record, I'm not a big fan of Biden, I think he has too many hidden pots in the fire. But corporations can't be trusted to work for the public good, ever. This i

    • by dcw3 ( 649211 )

      You can't wait until an actual emergency to be prepared for one. I don't know about the legality, but the need is certain. And I don't often agree with this administration, but they need to address this issue one way or another.

  • While it may be something that should be done, at this point it may be with little point. Do we honestly think that businesses haven't been beating the bushes to get the supplies they need? You can't find what isn't there; no matter how much money you offer, you can't buy what doesn't exist.

    Why do you think manufacturers have been talking about making chips in the US again? It's not because it's cheaper to build them here.

  • The AMD White house (Score:4, Interesting)

    by t0qer ( 230538 ) on Friday September 24, 2021 @12:49PM (#61828811) Homepage Journal

    My start in tech was selling grey market intel motherboards for a small 3 man chinese shop across the street from what would become the AMD white house. The campus was finished right about 5 months into my job. Granted I don't think it was a fab plant, but it was important. For lunch I'd rub shoulders with AMD folks at Pizza Depot down the street. Silicon Valley was alive then. Lawrence Expressway was the place to be in that era.

    Drove by just a few months ago. It's being demolished for housing. Weird Stuff Warehouse is gone. HSC has merged with Excess Solutions. Curtis Trading company went crazy during Y2k, sold out and started a compound out in Oregon somewhere.

    At once time we had an ecosystem here that could have spun things back up quickly. People would go to these secondhand places and get gear to teach themselves. No longer. I have little to no hope that the US will be back in the chip manufacturing anytime soon. Everything is gone, replaced with either housing, big box stores, or chain restaurants. Biden can "C'mon man" all he wants, won't change a thing.

  • invoking laws/regs -- out of context and not in their intended spirit -- to facilicate market meddling

    sometimes the best answer is less/removal of something; I wish there were some way to ensure this option has been fully considered before jumping into the "let's assume more gov't is the best way to go" approach

    too much gov't power begets corruption and is generally anathema to the concept of individual rights and freedoms

    I know it's hard to do and it's a fuzzy line to be sure, but jeez, does phukking every

  • . . . is "Piss off, we'll see you in court." The federal government does not have the constitutional authority to do anything like this. I hope the manufacturers make that very clear.
  • These companies have not been forth coming with their CONFIDENTIAL production data. It is the crucial data to running their business. Biden wants that info, to hand over to the Chinese. Follow the money.
  • by Jodka ( 520060 ) on Friday September 24, 2021 @02:39PM (#61829355)

    from the /. summary:

    The Commerce Department is now asking companies to fill out questionnaires within 45 days providing supply chain information. The request is voluntary but Raimondo said she warned industry representatives that she might invoke the Defense Production Act or other tools to force their hands if they don't respond.

    translation:

    "We are going to confiscate sensitive corporate sales information, though we have no plausibly legitimate motive for obtaining that, and we promise to only use it honestly for the public good," says notoriously corrupt government bureaucrat.

    Consider the facts:
    - Gina Raimondo stole millions from a state pension fund. [forbes.com]

    - It is absurd to believe that Gina Raimondo having sales figures could repair 1)an imbalance between manufacturing capacity and demand 2)latency in standing up new fabs caused by intrinsic complexity of their design 3) transportation bottlenecks 4) labor shortages in the US caused by government disincentives for work. 5) a surge in home electronic purchases caused by lockdowns. Gina confiscates sales data and reads that Tesla bought so many semiconductors from AMD. In response, she does what exactly to remedy the semiconductor shortage?

    - The incentives of all private parties involved align with a solution; Semiconductor manufactures want more chips sales, auto manufacturers want more chips, shippers want to transport more.

    An ethically-challenged bureaucrat is not going to step in and, by confiscating sensitive corporate sales information, remedy shortages. Though she very well might engage in insider trading or sell confiscated information about customers and sales volumes of corporations to their competitors.

    The more powers granted to government, the greater the incentive for criminals to occupy public office. An advantage to a criminal of wielding government authority is that private actors can be forced into disadvantageous actions which they would not take voluntarily, for the personal profit of corrupt bureaucrats and politicians.

  • It'll turn out that everything is made in China! It sounds like a bad joke but remember the "origin" is the place that adds the greatest value. A wafer costing peanuts is imported and split locally into hundreds of chips that are plastic encapsulated for resale at considerable mark-up. Thus the official origin is not China, but the dependency on China remains.
  • Here's a great video from Wendover Productions that argues that the main culprit isn't JIT production, per se, but rather badly implemented JIT and Toyota-principle inventory management.
    https://www.youtube.com/watch?... [youtube.com]
    It seems that at least Toyota has learned from their supply chain disruption by th hige Kapan earthquake, and has adjusted their supply chain accordingly. Many other have not.
  • Now I just have to find somewhere to immigrate.

  • I told you the differences are an illusion.
    In actual practice, they all follow the same policies, no matter what they *say* they are.
    Right wing, left, wing is an illusion to keep us distracted. It's all on the same bird!

    Obama also just kept Bush's policies going.
    Trump just extended them.
    And Biden again keeps them going.
    How much do you wanna bet that the next one will top even Trump?

    It's a good cop, bad cop game.
    Fueled by the denial of the American population, and the false belief that this plutocratic oliga

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