Steel Products

Manufacturers Call for Fair Allocation of Semiconductor Chips

Written by David Schollaert

May 7, 2021

The U.S. appliance industry has a chip on its shoulder when it comes to competing with automakers for the scarce supply of semiconductors. The Association of Home Appliance Manufacturing (AHAM) has joined two of its sister industry associations—the Air-Conditioning, Heating and Refrigeration Institute (AHRI) and the National Electrical Manufacturers Association (NEMA)—in appealing to the Department of Commerce (DOC) for “fairness” in government assistance and policy with respect to the semiconductor chip shortage.

In a May 7 letter to Commerce Secretary Gina Raimondo, the heads of the three organizations—whose combined industries claim to represent 775 manufacturers employing more than 2.6 million workers, with an economic impact of $578 billion to the domestic marketplace—highlighted their dependence on the global supply of semiconductor chips. The letter challenged the secretary’s recent statement that seemed to prioritize the automotive industry’s need.

Raimondo was recently quoted in response to a question from an automotive executive at a Council of the Americas event regarding the chip shortage, saying, “We’re working hard to see if we can… prioritize the needs of our auto companies since there’s so many American jobs on the line.”

In the letter, the organizations acknowledged the importance of the auto industry, but reminded Raimondo that other industries also require the semiconductor chips. Their members’ products, which “perform essential functions across critical infrastructure sectors including healthcare, the energy grid, information technology, medical imaging, transportation, water/wastewater, and efficient home appliances,” also depend on the global supply of semiconductors. The lack of chip availability is creating production disruptions to their member companies, which have direct impact to the downstream customer, the letter stated.

“The supply chain is already very fragile with the pandemic, port and shipping issues, metal shortages, etc. We recognize there is a shortage of semiconductors, but they should not be reallocated from our industries to the automotive sector for political reasons. That is just robbing Peter to pay Paul,” said Kevin Messner, AHAM’s Senior VP of Policy. “Appliance manufacturing is trying to keep up with the demand for appliances during a pandemic, and if semiconductors are taken from them, there would be longer backlogs because of production slowdowns for consumers needing a refrigerator, cooking range, and clothes washers.”

The letter concludes by appealing for fair play in the marketplace: “During this shortage, it is essential that the nation’s semiconductor supply be fairly allocated across industry sectors and that administration statements do not—explicitly or implicitly—favor any one sector over others. We simply ask for fairness so that the health, safety, comfort, productivity, and other needs of Americans can be met to ensure that people can stay safe and healthy.”

By David Schollaert, David@SteelMarketUpdate.com

David Schollaert

David Schollaert is a senior analyst for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. Based in CRU’s Pittsburgh office, David can be reached at david@steelmarketupdate.com or 724-720-1008.

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