White House Warns Of 'Escalating Vulnerabilities' To U.S. From Semiconductor Issue

The White House is holding a classified briefing on Wednesday with some U.S. lawmakers on the increasing risks to the American economy from semiconductor supply chain issues.

White House National Economic Council Director Brian Deese told reporters at a breakfast on Wednesday "the best estimates are the lack of available semiconductors probably took a full percentage point off of GDP in 2021."

The briefing will "provide them with our latest analysis from the intelligence community and Defense Department around the core vulnerabilities and risks to our economy and national security" from the semiconductor supply chain.

The White House has been pushing Congress to approve $52 billion in U.S. subsidies for semiconductor chips manufacturing after months of discussions.

The Senate first passed chips legislation in June that also authorized $190 billion to strengthen U.S. technology and research to compete with China, while the House of Representatives passed its version in early February. Deese said he hopes both the Senate and House will appoint negotiators this week to "quickly" begin a formal process to finalize a compromise bill.

"The risks are profound," Deese said of what would the U.S. economy face with a severe disruption. Deese cited "economic moves by key competitors -- most notably China around the escalating vulnerabilities we have from the semiconductor issue."

A persistent industry-wide shortage of chips has disrupted production in the automotive and electronics industries, forcing some firms to scale back production, and there have been growing calls to decrease reliance on other countries for semiconductors.

The bills take different approaches to addressing U.S. competitiveness with China on a wide range of issues, as well on trade and some climate provisions.

The Biden administration notes the United States produced nearly 40% of all chips in 1990 while today it accounts for only 12% of global production.