The global chip shortage is creating bottlenecks across industries, from gaming to automobiles, while the labor crisis is leaving ports backed up with groceries, clothes, and other goods.
Business leaders at the Fortune CEO Initiative in Washington D.C. on Tuesday shared how they are approaching these problems—and while they were optimistic, they warned that they won’t be remedied overnight.
“Some of these issues are going to take five to ten years to fix,” said Katie Koch of Goldman Sachs Asset Management. She called 2020 “a year of recovery,” and said the focus has now shifted to resiliency.
Simon Segars, CEO of chip designer ARM, said the industry had been going through a downturn at the end of 2019 and had low inventory. When COVID-19 hit, he explained, manufacturers slowed down during the period of uncertainty. This created a “hiccup” in the system when demand picked up dramatically as people realized they needed more digital tools for remote work and learning.
“All the manufacturers are trying to squeeze as much as they can out of their current capacity,” Segars said, while also looking for places to invest in their supply chain for the future. He added that finding capacity isn’t simple, since it can take months to manufacture a wafer.
Barbara Humpton, president and CEO of Siemens USA, said digitalization will play an important part in helping to build a more secure supply chain—which makes the importance of fixing the chip supply chain even more urgent.
Humpton was one of the business leaders who joined President Biden at the White House on Monday when he signed the historic $1.2 trillion infrastructure bill.
“Governments will be able to articulate certain communication and goals, but business is going to have to carry this across the line,” Humpton said.
She said building capacity, prioritizing sustainability, and creating a more equitable workforce are three factors that will have to be balanced when creating a secure and resilient supply chain.
“Our job is to lead the way through that maze,” she said.
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