Cramer calls on US to fund factories to fight chip shortage and unemployment

CNBC’s Jim Cramer said Wednesday that the United States should fund the development of a chip manufacturing complex in order to combat the country’s high unemployment rate and the chip shortage plaguing American businesses.

More and more companies, including automakers like Ford and General Motors, have recently sounded the alarm bells on global component sourcing, leading them to cut back on production of their own products.

Meanwhile, the US labor market, with an unemployment rate of 6.3%, is struggling to gain traction emerging from the coronavirus-induced recession.

“We need more chips and we need more jobs,” Cramer said on “Mad Money”. “Why not kill two birds with one stone? It is time for our government to invest in building the largest and best semiconductor foundry complex… in the world.”

Automobiles are more and more technologized, requiring silicon chips for things like power steering, brake sensors, and entertainment devices. The scarcity of supply has forced GM and Ford to close factories, delaying delivery of new cars. GM has warned that the disruption could impact its 2021 targets.

Demand for chips, which are also used in products such as televisions, game consoles and computers, has skyrocketed during the pandemic as Americans shifted to distance learning and work environments. Cramer also blamed globalization, which has allowed companies to outsource manufacturing to giants like Taiwan Semiconductor and Samsung Electronics in Asia.

The more connected cars are, the more semiconductors they will need.

“Believe me, you’re going to start hearing about this shortage constantly, daily, as it wreaks havoc across all kinds of industries and makes us a much less competitive society and maybe even a hostage. a bigger chip customer, the PRC (China). We have to move forward, “Cramer said.

“Our companies cannot get enough chips because there is not enough production in the world and the lack of chips is hurting all kinds of manufacturing,” he added.

He said he was optimistic about Gina Raimondo, the governor of Rhode Island who was appointed by President Joe Biden to head the US Department of Commerce. Raimondo is a former venture capitalist, which gives her an ideal perspective on the business world, Cramer said.

He also said that the low interest rate environment can be a catalyst to help finance the federal project with bonds.

“America’s best tech industry, the greatest intellectual property there is in the technology arena, is in the semiconductor capital goods arena,” Cramer said, pointing to companies like Lam Research, KLA Tenor and Applied Materials which have the machines needed to make chips.

“Meanwhile, building massive semiconductor foundries can put more people to work than any other infrastructure project.

Disclosure: Cramer’s charitable trust owns shares of Ford.