Chip makers ask the Biden government to invest in American industry

Chip makers ask the Biden government to invest in American industry

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The effort can help solve the critical problem the scarcity of microchips currently hinders industries, from automobiles to video games. It can also address long-standing concerns about reducing the US’s ability to produce these crucial electronic components.
Industry leaders, including Intel (INTC), OMG (OMG) and Qualcomm (QCOM) sent a letter to President Joe Biden on Thursday urging him to include financing for semiconductor manufacturing and research in his government’s plans for the economic recovery from the pandemic.
“(Semiconductors) enable the technologies needed to achieve their Build Back Better goals, including smarter and safer transportation, greater broadband access, cleaner energy and a more efficient power grid, while providing high-paying jobs for Americans and strengthens our advanced manufacturing base, “the group said in the letter, adding that robust US chip making is important to” increase our national security “.

White House press secretary Jen Psaki told reporters on Thursday that the government is working to resolve the chip shortage “by identifying potential bottlenecks in the supply chain and working actively with key stakeholders in the industry and with our business partners to do more now. “

She added that Biden also seeks long-term support for the industry.

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

A critical industry for both technology and defense

Psaki’s comments and the letter from industry leaders to Biden come during a critical global semiconductor shortage. The automakers were hit particularly hard, and Ford (F)and GM (GM) they temporarily closed some of their factories because of that. Analysts estimate that Volkswagen (VLKAF)– the largest carmaker in the world – may lose 4% of its total global production in the first three months of the year because of the deficiency.
GM extends shutdown at three plants due to chip shortages

The shortage adds urgency to a long-term conversation involving legislators and chip makers about the need to increase Semiconductor manufacturing capacity in the United States.

US officials and industry participants have warned that not expanding domestic semiconductor manufacturing could undermine national security because state-of-the-art microchips have crucial military and defense applications.
Currently, the industry depends heavily on foreign production, mainly from Taiwan, South Korea and China. Authorities are concerned about the ramifications of centralizing production for this critical industry in a region where US rival China, which has been fighting the United States for technological dominance, has so much influence.
Intel said last summer that it was in talks with the U.S. government on how to “strengthen domestic sources” of microelectronic technology. TSMC (TSM), another major chip maker, announced plans in May to build a $ 12 billion plant in Arizona.

Industry leaders say that many more needs being done.

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

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

As part of the most recent annual defense bill passed last fall, known as the National Defense Authorization Act, Congress enacted a clause called CHIPS for America Act, which authorizes the government to offer incentives for making semiconductors and making investments in related searches.
Intel wants to help US officials boost chip manufacturing on American soil

The industry group called the CHIPS Act an “important first step” and urged Biden to allocate resources for such incentives, including tax credits or concessions, as part of its management’s infrastructure and recovery plans.

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

The Information Technology Industry Council, an IT business group, sent a similar letter to Biden this week, asking him to include “substantial funding” for the CHIPS Act as part of its budget proposal for the next fiscal year.

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

“The review will focus on identifying the immediate actions we can take, from improving the physical production of these items in the U.S. to working with allies to develop a coordinated response to the weaknesses and bottlenecks that are hurting American workers,” said Psaki.

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