Chipmakers are urging Biden’s administration to invest in US manufacturing

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The effort could help resolve the criticism scarcity of microchips is currently hobbling industries from automobiles to video games. It could also address long-standing concerns about the US’s diminishing capacity to manufacture these critical electronic components.
Market leaders, including Intel INTC AMD AMD and Qualcomm QCOM sent a letter to President Joe Biden on Thursday urging him to include funding for semiconductor manufacturing and research in his government’s plans for economic recovery from the pandemic.
“(Semiconductors) enable the technologies needed to achieve your Build Back Better goals, including smarter and safer transportation, greater broadband access, cleaner energy, and a more efficient grid, while also providing well-paid jobs for Americans and bolstering our advanced manufacturing base, the group said in the letter, adding that robust US chip manufacturing is important to “enhancing our national security.”

White House press secretary Jen Psaki told reporters on Thursday that the government is working to address the shortage of chips by “identifying potential bottlenecks in (the) supply chain and actively partnering with key industry stakeholders and our trading partners to do more now. “

She added that Biden is also looking at longer-term support for the industry.

Biden is expected to sign an executive order in the coming weeks to conduct “a comprehensive review of critical goods supply chains,” including semiconductors, Psaki said.

A crucial industry for both technology and defense

Psaki’s comments and the industry leaders’ letter to Biden come amid a critical global shortage of semiconductors. Car manufacturers have been hit particularly hard, and Ford F.and GM GM have temporarily closed a number of their plants. Analysts estimate that Volkswagen VLKAF– the world’s largest car company – the shortage could lose 4% of its total global production in the first three months of the year.
GM extends the closure of three plants due to a shortage of chips

The shortage increases the urgency of a lengthy conversation between legislators and chip makers about the need to increase US semiconductor manufacturing capability.

US officials and industry players have raised the alarm that failing to expand domestic semiconductor manufacturing could harm national security as advanced microchips have critical military and defense applications.
Currently, the industry relies heavily on foreign production, largely from Taiwan, South Korea and China. Officials are concerned about the impact of centering production on this critical industry in a region where America’s rival China, which the United States is struggling for technological dominance, has so much influence.
Intel said last summer it was in talks with the US government on how to boost the “domestic resources” of microelectronic technology. TSMC TSM, another major chip maker, announced plans in May to build a $ 12 billion factory in Arizona.

Market leaders say many more needs to do.

“Our share of global semiconductor manufacturing has steadily declined from 37 percent in 1990 to 12 percent today,” the CEOs said in their letter to Biden on Thursday. While the US’s share of global chip production has shrunk, China’s has grown and is now at around 12%, experts say.

“This is largely because the governments of our global competitors provide significant incentives and subsidies to attract new semiconductor manufacturing facilities, while the US does not,” the group wrote. As a result, they said, America’s technology leadership is at risk in the race for precedence in the technologies of the future, including artificial intelligence, 5G / 6G and quantum computing. ‘

As part of the most recent annual defense law passed last fall, known as the National Defense Authorization Act, Congress passed a provision called the CHIPS for America Act that empowers the government to provide incentives for semiconductor manufacturing and make investments in related research.
Intel wants to help US officials boost chip production on US soil

The industry group called the CHIPS law an “important first step” and urged Biden to allocate funding for such incentives, including tax credits or subsidies, as part of his administration’s recovery and infrastructure plans.

“In partnership with Congress, your government now has a historic opportunity to fund these initiatives to make them a reality,” the group said. “We believe that bold action is needed to meet the challenges we face. The cost of inactivity is high.”

The Information Technology Industry Council, an IT trade group, sent a similar letter to Biden this week, calling on him to include “substantial funding” for the CHIPS Act as part of his budget proposal for the upcoming fiscal year.

Such advice could be instructive as the Biden government reviews its semiconductor supply chains – part of the planned executive order that Psaki said will be signed in the coming weeks.

“The review will aim to identify the immediate actions we can take, from improving the physical production of those items in the US to working with allies to develop a coordinated response to the weaknesses and bottlenecks. that harm American workers, ”said Psaki.

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