The COVID-19 pandemic and the associated responses of governments around the world initiated a series of global supply chain disruptions. This monumental crisis affected the production and deliveries of materials and products at both source and destination, and exposed systemic deficiencies in the existing supply chain. These deleterious effects on the production, distribution, and manufacturing persist to this day. Global commerce has been most visibly harmed by semiconductor chip shortages, port congestion, increased commodity prices, and carrier shortages. Recent geopolitical tensions and armed conflicts around the world have further exacerbated these challenges.
The key metals and minerals in a battery. Generative AI. By Stanislav.
The shortage of semiconductor-based integrated circuits, although apparent in our everyday life (such as shortage of new automobiles), particularly resonates with the materials research community. Computer chip use is expanding exponentially, becoming more critical to the functioning of the global economy. Construction of a new microchip manufacturing plant requires several years, significant investment, and access to cutting-edge manufacturing technologies. Existing supply chains are spread out across the world and are impacted by worker shortages, manufacturing facility shutdowns, and backlogs in ports. Owing to these obstacles, US investors are increasingly looking to countries closer to home, such as Mexico, to establish chip production operations.1
Raw material supply chains have also become increasingly vulnerable to disruptions. Russia is the source of over one-third of the world’s palladium, a rare metal used in semiconductor chips. According to the US Geological Survey, Russia is the source of six major minerals for which the United States is more than 50% dependent on imports. Ukraine is a source of two major mineral imports: titanium and gallium. The United States is more than 90% dependent on imports of titanium and more than 100% dependent on imports of gallium. China is the US’ sole source for over 90% of rare earth elements, such as neodymium. The absence of a resilient domestic supply of these materials threatens the US economy and national security.2
The Materials Research Society (MRS) Government Affairs Committee commissioned this report to inform the Society membership and the materials research community of actions taken by the US federal government to mitigate supply chain risks.
Congressional actions
Congressional Supply Chain Caucus
On January 18, 2022, Congressional Representative Rodney Davis (R-Ill.) announced the relaunching of the Congressional Supply Chain Caucus with Rep. David Rouzer (R-N.C.), Rep. Colin Allred (D-Texas), and Rep. Angie Craig (D-Minn.). Originally started just before the onset of the COVID-19 pandemic, the Congressional Supply Chain Caucus was created to work toward updating and improving the supply chain system in the United States. The caucus will focus its work on supply chain challenges related to manufacturing, trade, delivery, and resiliency.3
There are a number of supply chain-related caucuses in Congress, including the Air Cargo Caucus, the Digital Trade Caucus, the House Manufacturing Caucus, and the US-China Working Group. The Congressional Supply Chain Caucus would seek to bring together relevant issues from these separate groups.
The CHIPS and Science Act
Starting with efforts in the previous presidential administration to onshore semiconductor manufacturing, and more recently with the current administration to address the semiconductor chip crisis, Congress passed the CHIPS and Science Act, and it was signed into law by President Joe Biden on August 9, 2022.4
The new law contains two major components:
The CHIPS (Creating Helpful Incentives to Produce Semiconductors) component seeks to develop onshore domestic manufacturing of semiconductors critical to US competitiveness and national security. The law appropriates over USD$54 billion for this desired outcome.5
The Science component authorizes, in dollar terms, the largest five-year investment in public R&D in the country’s history—nearly $170 billion dollars (an increase of over $82 billion over baseline). The main institutions covered are the National Science Foundation, the Department of Energy Office of Science, and the National Institute of Standards and Technology.6
Biden administration executive actions
On February 24, 2022, the Biden administration announced the release of six executive-branch reports and a White House “capstone” report as called for by Executive Order (EO) 14017 on America’s Supply Chains (February 24, 2021). These reports brought to a close yearlong sectoral assessments of the supply chains supporting the US industrial base from seven cabinet-level departments—the Departments of Commerce (DOC), Defense (DoD), Energy (DOE), Homeland Security (DHS), Transportation, Health and Human Services (HHS), and Agriculture, following an initial phase of reviews issued in June 2021.7
Phase one: 100-day supply chain reviews
In the first initial work phase established by EO 14017, DOC, DOE, DoD, and HHS were instructed to assess supply chain vulnerabilities across four key products: semiconductors, large-capacity batteries, critical minerals and materials, and pharmaceutical ingredients. In June 2021, these assessments were combined in a report of “100-Day Reviews” published by the White House. In turn, this report identified insufficient US manufacturing capacity, misaligned markets, industrial polices of other countries, geographic (global) concentration of key supply chains, and limited international coordination as contributing to the challenges faced in the commerce, energy, defense, and health and human services sectors.8
The 100-day report offered recommendations ranging from investing or promoting investment in manufacturing and R&D, to deploying procurement, technical assistance, grants, and financing to support diversification among suppliers, to using market tools to advance sustainability and workforce standards, as well as increasing multilateral engagement with global allies and strengthening international trade rules.9
Phase two: One-year sectoral assessments
The reports issued in February represent the second phase of work under EO 14017, where the federal departments were to recommend specific policy actions and proposals for strengthening and safeguarding resilient supply chains.10 Links to the DoD, DOE, DOC/DHS, and HHS reports with areas of focus for those of particular importance to the materials research community are highlighted as follows:
Department of Defense: Securing Defense-Critical Supply Chains emphasizes the following five areas: (1) kinetic capabilities; (2) energy storage and batteries; (3) castings and forgings (“C&F”); (4) microelectronics; and (5) an update of the 100-day critical minerals and materials report.11
Department of Energy: America’s Strategy to Secure the Supply Chain for a Robust Clean Energy Transition focuses on the following technologies: (1) carbon capture materials; (2) electric grid; (3) energy storage; (4) fuel cells and electrolyzers; (5) hydropower including pumped storage hydropower; (6) neodymium magnets; (7) nuclear energy; (8) platinum group metals and other catalysts; (9) semiconductors; (10) solar photovoltaics; and (11) wind.12
Department of Commerce/Department of Homeland Security: Assessment of the Critical Supply Chains Supporting the US Information and Communications Technology Industry spotlights (1) software; (2) printed circuit boards; (3) fiber optic cable; (4) printed circuit board assemblies and subassemblies; (5) routers, switches, and servers; and (6) liquid-crystal diodes/displays.13
Health and Human Services: Public Health Supply Chain and Industrial Base stresses (1) personal protective equipment; (2) durable medical equipment; (3) testing and diagnostics; and (4) pharmaceuticals.14
The Biden administration announced additional plans to build long-term resilience in supply chains based on findings from the reports ordered by EO 14017. New actions include the following:
proposing a new domestic manufacturing initiative through the Export–Import Bank to strengthen US manufacturing exports;
advancing the technological leadership of manufacturers based on a series of roundtables and the first America’s Seed Fund Start-up Expo;
opening of the $450 million Port Infrastructure Development Grant program; and
planning to expand domestic rare earth processing and reforming mining laws.15
Other Biden administration actions
Supply Chain Disruption Task Force
On June 8, 2021, President Biden announced the creation of a Supply Chain Disruption Task Force, a whole-of-government approach focused on relieving near-term supply and demand mismatches, specifically in the homebuilding and construction, semiconductor, transportation, and agriculture and food industries. Furthermore, DOC is directed to increase data sharing among federal departments and agencies.16
Summit on Global Supply Chain Resilience
On October 31, 2021, President Biden attended a summit in Rome for the EU and 14 other trade partners at which he promoted administration actions. These actions included the expansion of port operating hours on the US West Coast; the launching of an Early Warning System for potential disruptions in semiconductor manufacturing; and the Li-Bridge—a new public–private partnership seeking an acceleration of a robust and secure domestic supply chain for lithium-based batteries.17
In the summit statement, four key pillars of supply chain resilience are outlined: (1) transparency; (2) diversity, openness, and predictability; (3) security; and (4) sustainability. In his remarks, President Biden announced additional funding to cut port congestion and an executive order to strengthen the management of defense stockpiles for minerals and materials.18
These US government policy activities clearly could have an impact on the supply of materials and components used by materials researchers in the course of their R&D activities, while also potentially providing opportunities for them to actively engage in programs to mitigate supply chain risks. As Congress and the White House undertake further supply chain activities of relevance to the materials research community, the MRS Government Affairs Committee will communicate them to its members and the community.
Endnotes
https://www.washingtonpost.com/technology/2021/03/01/computer-chip-shortage-explainer-qa/; https://www.nytimes.com/2023/04/25/business/economy/chips-commerce-department.html; https://apnews.com/article/inflation-health-china-business-united-states-8d5fffd96a46d0690d843f5e1de410fe; and http://country.eiu.com/article.aspx?articleid=642458447&Country=Mexico&topic=Economy&subtopic=For_1
https://mineralsmakelife.org/blog/the-ripple-effect-of-world-events-on-mineral-supply-chains/; and https://www.politico.com/news/magazine/2022/12/14/rare-earth-mines-00071102
https://www.whitehouse.gov/wp-content/uploads/2022/03/budget_fy2023.pdf
https://www.whitehouse.gov/wp-content/uploads/2022/02/Capstone-Report-Biden.pdf
https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/08/fact-sheet-biden-harris-administration-announces-supply-chain-disruptions-task-force-to-address-short-term-supply-chain-discontinuities/; and https://www.whitehouse.gov/wp-content/uploads/2022/02/Capstone-Report-Biden.pdf
https://www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chain-review-report.pdf; and https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/08/fact-sheet-biden-harris-administration-announces-supply-chain-disruptions-task-force-to-address-short-term-supply-chain-discontinuities/
https://www.dhs.gov/sites/default/files/2022-02/ICT%20Supply%20Chain%20Report_2.pdf