Cramer calls on U.S. to fund crops to deal with chip scarcity, unemployment
CNBC’s Jim Cramer said Wednesday the United States should fund the development of a chip maker to address both the high unemployment rate in the country and a chip shortage that affects American businesses.
More and more companies, including automakers like Ford and General Motors, have recently sounded the alarm about global component shipments, prompting them to cut back on the production of their own products.
Meanwhile, the US job market is struggling to get out of the coronavirus-induced recession with an unemployment rate of 6.3%.
“We need more chips and we need more jobs,” Cramer told Mad Money. “Why not kill two birds with one stone? It’s time for our government to invest in building the largest and best complex of semiconductor foundries in the world.”
Automobiles are getting more technological, which requires silicon chips for things like power steering, brake sensors, and entertainment devices. The supply shortage has forced GM and Ford to close factories, delaying the delivery of new cars. GM warned the disruption could affect its 2021 goals.
The demand for chips, which are also used in products such as televisions, game consoles, and computers, increased during the pandemic as Americans switched to remote work and study environments. Cramer also blamed globalization, which allowed companies to outsource manufacturing to giants like Taiwan Semiconductor and Samsung Electronics in Asia.
The more connected cars become, the more semiconductors they will need.
“Believe me, you will hear about this shortage every day because it is devastating all kinds of industries, making us a much less competitive and perhaps even a hostage company. Hostage to a larger chip customer, the PRC. We have to Be one step ahead of that, “said Cramer.
“Our companies cannot get enough chips because there is not enough production in the world, and this shortage of chips affects all types of manufacturing,” he added.
He signaled that he was optimistic about Gina Raimondo, the governor of Rhode Island who was named head of the US Department of Commerce by President Joe Biden. Raimondo is a former venture capitalist who gives her an ideal perspective on the business world, Cramer said.
He also said the low interest rate environment can be a catalyst to fund the federal project with bonds.
“America’s best tech industry, the most intellectual property there is in technology, is in semiconductor capital goods,” said Cramer, referring to companies like Lam Research, KLA Tenor and Applied Materials, which make machines for making chips need.
“Building gigantic semiconductor foundries enables more people to work than any other infrastructure project.”
Disclosure: Cramer’s charitable foundation owns shares in Ford.
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