In this four-part series, we examine areas that could create long-term impacts in the lives of people in the U.S. should the $1.2 trillion bipartisan infrastructure spending bill become law.
As the $1.2 trillion infrastructure bill is under consideration in the U.S. House of Representatives, consumers are seeing substantial shortages of products and materials. For example, semiconductors, intel chips, and lumber are in high demand and short supply.
Semiconductors can be found in most modern-day electronics and are essential to the operation of nearly all vehicles on the road today.
Due to the pandemic, vehicle purchases decreased dramatically as unemployment increased and lockdowns reduced traffic. According to the Semiconductor Industry Association, automakers reduced production in the second quarter of 2020. However, semiconductor chips remained in high demand due to their use in health care, virtual learning and work-from-home efforts. As the economy began to rebound and car purchases increased, automakers need for semiconductors dramatically increased as well.
But the association notes that “this supply-demand imbalance cannot be remedied with the ‘flip of a switch.’” Semiconductor manufacturing is not suited to rapid and large shifts in demand, since it takes time to ramp up production. Making a semiconductor is one of the most complex manufacturing processes.
As competition for the limited supply of semiconductors increased, the shortage impacted personal computers as intel processors were in limited supply. Writing for the Los Angeles Times, Ian King reported the shortage was exacerbated by ongoing trade wars between China and the United States. “U.S. companies dominate the semiconductor industry as measured by sales and design,” King wrote. “But production, a vital element in determining the capabilities of chips, has shifted to Asia, where Taiwan Semiconductor Manufacturing Co. and South Korea’s Samsung Electronics Co. have taken leadership.”
Intel Corporation’s CEO Pat Gelsinger told King the chip industry would not be back to healthy supply levels until 2023.
Since April 2020, the cost of lumber caused the price of an average single family home to surge $30,000, according to the National Association of Homebuilders (NAHB).
“What is driving the increase in lumber prices are recent convergence of Canadian lumber tariffs, increase in demand for home remodeling and building of homes brought on by the pandemic and hiccups in supply related to transportation,” said Robert Bardon, a North Carolina State University professor of forestry and environmental resources and associate dean for extension at the College of Natural Resources.
Bardon expects lumber prices to return to normal levels as the U.S. comes out of the pandemic. Prices are already dropping, according to NAHB, returning to pre-pandemic levels beginning in July.