Why Biden can't fix the semiconductor shortage

Yahoo Finance's Rick Newman on why Biden administration efforts to boost chip production could be problematic.

Video transcript

ADAM SHAPIRO: We want to switch gears to something that is immediately affecting millions of people. And that's the semiconductor shortage. If you tried to buy a car, then you know there's a trouble out there because other manufacturers are having to shut down production because of the semiconductor shortage. Let's bring in Rick Newman, because he is looking at why the Biden administration is unable to fix this shortage, and if they were to follow certain recommendations why it may just be a boondoggle. Why?

RICK NEWMAN: The Biden administration is very aware of this. I mean, they've been talking about it basically ever since Biden got into office. There has been a review of the supply chain stability, with semiconductors being one of the main focuses. And what the Biden administration wants to do is bring more semiconductor manufacturing back to the United States.

And Congress may actually pass as much as $50 billion to do that by later this year, Adam. But here's the catch-- that $50 billion would go toward new manufacturing facilities. They take years to get in place. It can take three to four years to build a semiconductor manufacturing facility. And in the meanwhile, in terms of doing anything to ease the shortage right now, which is really cutting into auto production and employment in that sector, there just aren't enough of these things to go around.

The auto industry did not prioritize these things correctly when they were making their plans during COVID-- the COVID pandemic and the downturn last year. And they sort of went to the back of the line for semiconductors. And there just are not any more semiconductors to buy. And administration officials have said, look, if we were to somehow try to make semiconductors more available to the auto industry, we would just be taking them from some other industries.

So the majority of semiconductors, of course, made outside the United States-- the Biden administration wants to get the US back into the business of being a leader in semiconductor manufacturing. But if we get there, it's going to take four, five, six, maybe even 10 years.