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Transmission: Volvo’s fossil-free steel gets real, White House meets (virtually) to discuss chip shortage

We are learning a bit more about Monday’s meeting between the Biden administration and numerous companies, specifically the list of attendees. At least two large automakers — Ford and GM — will be involved, and Alphabet, AT&T and Samsung will join Intel on the list of tech companies represented. We also know that the virtual meeting will be more than a simple discussion of the current chip shortage that’s halted automobile production at different companies in different ways. Specifically, the meeting will also be a bit of a sales pitch for President Joe Biden’s American Jobs Plan. 

Biden will promote jobs plan as a way to alleviate chip shortage

While the plan is just that — a plan — for now, we can read in it certain aspects that the administration is likely to push for in a final bill. A White House fact sheet about the plan says Biden is calling on Congress to invest a total of $100 billion that could help domestic chip production. We knew about the $50 billion that the plan calls for in domestic semiconductor manufacturing and research, an amount that comes from the bipartisan CHIPS Act, which was introduced in Congress in 2020. The other $50 billion would be spent on creating a new office at the Department of Commerce that would be dedicated to “monitoring domestic industrial capacity and funding investments to support production of critical goods,” the White House said. 

The Semiconductor Industry Association (SIA) said in 2020 it was in favor of the CHIPS Act, and restated its support for domestic semiconductor R&D and manufacturing by signing on to a February 2021 letter to Biden that was issued by a number of automotive and manufacturing associations. The letter said, in part, “Given the central role of semiconductors, strengthening the U.S. position in semiconductor research, design, and manufacturing is a national priority. While the governments of our global competitors have invested heavily to attract new semiconductor manufacturing and research facilities, the absence of U.S. incentives has made our country uncompetitive and America’s share of global semiconductor manufacturing has steadily declined as a result.”

It’s not just domestic or regional production that can be beneficial to automakers and tech companies in the U.S. Simply having more chips available on the market could lower prices. Speaking at the 2021 Huawei Global Analyst Summit recently, the current rotating chairman of the Chinese tech giant, Eric Xu, said he expects chip prices to rise in the coming years. He identified the problem as “unwarranted U.S. sanctions” and other trade restrictions, and called for a return to trust and cooperation in the industry. Xu said Huawei invested around $21.7 billion in R&D last year. 

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Volvo rooting out carbon, even in steel

Northern Europe is likely to be a key location for companies that will ship out fossil fuel-free steel in the coming years. The new product, HYBRIT steel, is being developed by SSAB, a steel company based in Sweden. It has plans to make the steel without any fossil fuels in that country, in next-door Finland and in the U.S. before too long. 

HYBRIT steel is made using energy generated from hydrogen and fossil fuel-free electricity. It may not seem like an important step in greening the transportation industry, but SSAB notes that the global steel industry accounts for 7% of all greenhouse gas emissions in the world today. That’s not a typo. Seven percent just to make steel, since the production of a ton of steel creates almost 2 tons of CO2 emissions.

Volvo is going to use this fossil fuel-free steel in a limited number of test products later this year and will start small-scale serial production in 2022, with a “gradual escalation” to mass production starting in 2023. The first batches will be made in Sweden but U.S. production could start around 2026. 

If shippers want to keep the entire chain fossil fuel-free, they will need to offer their own clean transportation services for HYBRIT steel. No time like the present to start planning.  

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Grace Sharkey

Grace is an entrepreneur and former supply chain executive who has held positions in sales, operations, and consulting. She is passionate about the future of the industry and how technology can improve the experience for all supply chain members. She believes supply chain is the one industry that affects every human directly, and is looking forward to creating content that mirrors that sentiment. If you have a story to share, please contact me at [email protected]