In an effort to fortify economic security and build robust supply chains, the Biden-Harris Administration introduced its first-ever Quadrennial Supply Chain Review on December 19, 2024. The review delineates government strategies addressing supply chain vulnerabilities, bottlenecks, and inefficiencies, which are all crucial components in safeguarding jobs and fostering community development nationwide.
Gina M. Raimondo, the US Secretary of Commerce, emphasized the Administration’s focus on reinforcing supply chains and boosting America’s semiconductor manufacturing prowess. She highlighted the Administration’s proactive stance in partnering with industry to tackle supply chain challenges head-on, craft innovative solutions, and minimize future disruptions. “By working together,” she said, “we are not only enhancing economic and national security but are also preparing our supply chains to meet the demands of tomorrow, especially in vital sectors like information and communications technology and semiconductors.”
One significant advancement in this initiative is the introduction of the SCALE supply chain risk assessment tool by the Department of Commerce’s Supply Chain Center. This advanced tool uses over forty indicators to evaluate resilience and vulnerability, advocating for a coordinated approach between public and private sectors to bolster supply chain resilience.
The review’s findings paint a startling picture: most US goods industries exhibit exposure to structural supply chain risks, with many industries heavily reliant on inputs from medium-high or high-risk industries. Alarmingly, there is limited diversification in imports; nearly 38% of industries are dependent on products sourced from a single country, and over half show minimal diversification for critical inputs. Industries such as electronics, chemicals, and transportation are particularly vulnerable, with high import levels from certain countries, notably China, posing potential risks.
On a strategic front, the Review shines a light on several Department of Commerce programs designed to enhance supply chains, particularly via the CHIPS and Science Act, BEAD Program, Tech Hubs, and the Public Wireless Supply Chain Innovation Fund. Thanks to these initiatives, private investment in the semiconductor and electronics sector has reportedly surged over US$450 billion during the current administration’s term.
However, challenges persist. The Congressional Research Service shows that a staggering 90% of advanced semiconductor production happens in East Asia, with TSMC accounting for more than half. The Semiconductor Industry Association reports a sharp decline in US semiconductor market share, plunging from 37% in 1990 to 12% by 2020. To counteract this, the CHIPS Act has earmarked US$52 billion, aiming to reverse this downward trend.
Notably, a McKinsey & Company analysis suggests that diversifying supply chains could cut reliance on high-risk regions by 25%, though this requires coordinated efforts and considerable investments. Experts from the Peterson Institute for International Economics underscore that successful reshoring will demand synchronized policies, infrastructure development, and workforce training programs.
The Department of Commerce remains committed to refining policies for reinforcing supply chain resilience, though the long-lasting impact of these initiatives awaits evaluation. By addressing these supply chain challenges, the administration aims to ensure a stable economic future for the nation.
