Chipmakers urge Biden’s government to invest in US manufacturing

Chipmakers urge Biden’s government to invest in US manufacturing

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The effort can help solve critical people a shortage of microchips currently stumbling from cars to video games. It may also address the long-standing concerns about the shrinking U.S. ability to manufacture these important electronic components.
Industry 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 into his government’s plans for economic recovery from the pandemic.
“(Semiconductors) enable the technologies to achieve your Build Back better goals, including smarter and safer transportation, greater broadband access, cleaner energy, and a more efficient energy network, while also providing paid work to Americans and strengthening our advanced manufacturing base. , “the group said in the letter, adding that robust U.S. chip production is important to improving our national security.”

White House Press Secretary Jen Psaki told reporters on Thursday that the administration was addressing the shortage of chips by identifying ‘potential choking points in the supply chain’ and working with key industry stakeholders and our trading partners. work to do more now. “

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

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

A critical industry for technology and defense

Psaki’s comments and the industry leaders’ letter to Biden come during a critical global shortage of semiconductors. Car manufacturers have been particularly hard hit, and Ford (F)and GM (GM) some of their plants have therefore temporarily closed. Analysts estimate it Volkswagen (VLKAF)– the largest car company in the world – could lose 4% of its total global production during the first three months of the year due to the deficit.
GM extends shutdown at three plants due to chip shortages

The shortage adds urgency to a long-term conversation between lawmakers and discus makers about the need to enlarge American semiconductor manufacturing capability.

U.S. officials and industry role players have sounded the alarm that failure to expand the semiconductor manufacturing industry could jeopardize national security, as the latest microchips have important military and defense applications.
At present, the industry is heavily dependent on foreign production, mainly from Taiwan, South Korea and China. Officials are concerned about the impact of production centering on this critical industry in a region where US rival China, which is battling the United States for technological dominance, has so much influence.
Intel said last summer that it was in talks with the US government on how to strengthen domestic sources of microelectronics technology. TSMC (TSM), another major chipmaker, planned to build a $ 12 billion plant in Arizona in May.

Industry leaders say many more needs must be done.

“Our share of global semiconductor manufacturing has steadily declined from 37 percent in 1990 to 12 percent today,” CEOs said in their letter to Biden. While the U.S. stock produced global chips, China has grown to about 12 percent, 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 US does not,” the group wrote. As a result, they said, the U.S. “technology leadership is in jeopardy in the race to be the most important 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 passed a provision called the CHIPS for America Act, which authorizes the government to provide incentives for semiconductor manufacturing and make investments in related research.
Intel wants to help US officials promote chip production on US soil

The industry group calls the CHIPS Act an ‘important initial step’ and urges Biden to allocate funding for such incentives, including tax credits or grants, as part of its administration’s recovery and infrastructure plans.

“If you work 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 tackle the challenges we face. The cost of inaction is high.”

The Information Technology Industry Council, an IT trading group, sent a similar letter to Biden this week, requesting it to include substantial funding for the CHIPS Act as part of its budget proposal for the coming financial year.

Such advice could be instructive if the Biden government carries out its review of 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 the items in the US to collaborating with allies to a coordinated response to the weaknesses and bottlenecks affecting US workers. , to develop, “Psaki said.

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