EO 14017 Rant

EO 14017 Rant
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As we noted yesterday, President Biden signed an Executive Order (#14017) on February 24th entitled “America’s Supply Chains”.  We believe this was done in response to concerns that semiconductor shortages have been making headlines in the press and are said to be the cause of production limitations in the automotive industry.  The Executive Order asks Jake Sullivan, the Assistant to the President for National Security Affairs, and Keith Hennessey, the Assistant to the President for Economic Policy, to coordinate a 100 day study with the Department of Commerce, the Department of Energy, the Department of Defense, and the Secretary of Health and Human Services.  The Commerce Department is to focus on supply chain risks in the semiconductor manufacturing and advanced packaging space, the DOE on supply chain risks for high capacity batteries, the DOD on risks to the supply chain for critical minerals (rare earths), and the Secretary of Health is to focus on risks to the pharmaceutical supply chain.
Once the study is completed, which will have both risks and recommendations, the same team will coordinate a one year study with the same agencies and ones from the Department of Transportation and Department of Agriculture.  The one year reports are to identify the following:

• Critical Goods & Materials
• Manufacturing and other capabilities needed to produce said materials
• Potential intelligence and security risks that could affect such capabilities
• The ‘resilience and capacity of American manufacturing’, with emphasis on
  • Modernization to meet future needs
  • Gaps in domestic manufacturing
  • Supply chains with a single point of failure
  • Location of key manufacturing assets
  • Dominant supply by nations that are unfriendly or might become so
  • Current domestic workforce skill gaps

We hate to be critical of an effort to evaluate and modernize the US supply chain, but by the time the 465 days goes by until the reports are finished, the rest of the world, particularly China, will have continued to build out their semiconductor and similar infrastructure, and to expect significant change in the industries mentioned above on an immediate basis at that point is an exercise in futility.  There will need to be discussions for appropriations and political infighting that will postpone any real spending toward material improvements in the US supply chain, particularly in semiconductor production, for months after that, and we expect the necessary changes themselves will take years to implement. 
Rather than take the typical governmental path of studying what has already been studied, perhaps a more direct approach is needed.  Government sponsored R&D programs should be redirected toward process development that reduces the cost of semiconductor manufacturing, making actual production in the US more attractive, and of course, the use of tax incentives (with performance caveats) should be heartily encouraged and supported by both the Federal and state governments.  Critical material stockpiles should be developed using a buying program that makes fixed timing purchases against a realistic need schedule and local incentives for production of those materials should be encouraged[1].  Lastly, engineering and science education should be given a higher priority, so as to attract a larger pool of talent to drive the longer-term prospects for development of electronics in the US. 
But the problem is not really what to do, as studies have been done, reports written, and endless numbers of industry consultants have been paid, but with each new administration, the same things have to be done again, with the ‘new thought leaders’ of that administration, regardless of whether there is really any new spin on the topics.  We are spending all of this time and money on talking about the problems, when both need to be applied to fixing the problem.  As Linus Torvalds said,” Talk is Cheap. Show me the code.”  JOHO


[1] The US, Japan, India, and Australia have agreed to ‘cooperate to provide funds for new technologies and development plans.  Timing unknown.