Despite bipartisan support in the Senate, a plea by the Commerce Secretary and growing desperation from industry officials, Congress still can't get a key bill that funds the U.S. chip business over the finish line.
Why it matters: With the global chip shortage continuing to crimp the economy, the semiconductor industry has ramped up pressure for funding of U.S.-based manufacturing facilities as one remedy.
- Intel and memory chip maker Micron have both said they will spend $150 billion in the next decade, but have pressed for government help to close the cost gap with some Asian markets.
The big picture: The U.S. share of global semiconductor manufacturing has dropped from 37% in 1990 to 12%. Executives from Intel and Micron told lawmakers it costs at least 30% more to manufacture chips in the U.S. than it does in many Asian countries for three main reasons:
- Labor costs more in the U.S. than in Asia both for operating fabrication facilities and for building them.
- For the last 20 years, many Asian countries have focused on policies to grow the semiconductor ecosystem into a larger scale than what exists in the U.S.
- Some other countries provide greater incentives to the semiconductor industry than the U.S.
What's happening: The Senate, by a 68-32 majority, passed a China competition bill championed by Majority Leader Chuck Schumer (D-N.Y.) in June, but the House has not advanced it.
- The U.S. Innovation and Competition Act (USICA) includes $52 billion for domestic semiconductor manufacturing, and a host of other measures meant to improve U.S. competition against China.
- House Speaker Nancy Pelosi (D-Calif.) and Schumer last month announced they would negotiate an agreement on a final version to deliver to the president.
Between the lines: The legislation did not move on the fast track through the House the way it sped through the Senate.
- Schumer made the bill a legislative priority and used the power of his office to negotiate a bipartisan agreement in the Senate.
- House leadership focused on other priorities, including the infrastructure and the social spending bills, that are key to the Biden administration's agenda.
The intrigue: There could be House Republican opposition to parts of USICA, which garnered Republican support in the Senate.
- Rep. Jim Banks (R-Ind.) chairman of the Republican Study Committee, circulated a memo this summer outlining concerns conservatives may have with the bill, including that it might not be strong enough against the Chinese Communist Party.
What they're saying: Micron has said it wants the U.S. government to move forward on tax incentives while the company weighs where to build its next manufacturing plants.
- Intel CEO Pat Gelsinger told Axios' Ina Fried, "We can't be 30% or 40% more expensive than Asia. So help us close that gap so that we can build bigger and faster on U.S. soil."
Meanwhile, some House members have grown frustrated over the delay.
- "I am deeply concerned that the longer we wait to take action in Congress, the longer the detrimental effects of the semiconductor chip shortage will hamstring America’s automotive suppliers and slow economic growth," Rep. Haley Stevens (D-Mich.) said in a statement to Axios.
What's next: Pelosi told reporters last week she was convening relevant committee chairs to discuss the House version of USICA.
- Observers say they think it's unlikely USICA is passed this year, but with the commitment from House and Senate leadership, they believe it will eventually become law.
- "I am glad that the House and Senate have agreed to conference on USICA, but time is ticking," Commerce Secretary Gina Raimondo, who recently gave a speech on the issue in Detroit, told Axios in a statement. "Every day that we do not pass this legislation, we continue to fall behind and lose our competitive edge on the world stage."
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December 06, 2021 at 06:00PM
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Congress' chip-funding pause raises alarms - Axios
"chips" - Google News
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