Home News Cramer calls on U.S. to build factories to address chip shortage, unemployment

Cramer calls on U.S. to build factories to address chip shortage, unemployment

Cramer calls on U.S. to build factories to address chip shortage, unemployment

CNBC’s Jim Cramer said Wednesday that the United States should fund the development of a chipmaking compound in efforts to address both the nation’s high unemployment rate and a chip shortage that’s affecting American businesses.

More and more companies, including carmakers like Ford and General Motors, have recently sounded the alarm about the global supply of components, leading them to reduce the production of their own products.

Meanwhile, the U.S. labor market with a 6.3% unemployment rate is struggling to gain traction climbing out of 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’s time for our government to invest in building the biggest and best complex of semiconductor foundries … in the world.”

Automobiles are becoming increasingly more technologized, which requires silicon chips for things like power steering, brake sensors and entertainment devices. The scarcity of supply has forced GM and Ford to shut down factories, delaying delivery of new cars. GM warned the disruption could impact its 2021 goals.

Demand for chips, which are also used in products like televisions, game consoles and computers, has soared during the pandemic as Americans transitioned to remote work and learning environments. Cramer also pinned the blame on 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 require.

“Believe me, you’re going to start hearing about this shortage constantly, daily, because it’s wreaking havoc with all sorts of industries, and making us a much less competitive and perhaps even hostage company. Hostage to a bigger chip customer, the PRC (China). We got to get ahead of this.” Cramer said.

“Our companies can’t get enough chips because there’s not enough production worldwide, and that lack of chips is hurting all sorts of manufacturing,” he added.

He signaled that he is optimistic on Gina Raimondo, the governor of Rhode Island who was nominated by President Joe Biden to lead the U.S. Department of Commerce. Raimondo is a former venture capitalist, giving her an ideal perspective of the business world, Cramer said.

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

“America’s best tech industry, the most intellectual property that is anywhere in tech, is in the semiconductor capital equipment space,” Cramer said, pointing to companies like Lam Research, KLA Tenor and Applied Materials who have machines needed for making chips.

“Meanwhile, building gigantic semiconductor foundries can put more people to work than just about any other infrastructure project.”

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

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