Legislation takes aim at microchip crisis

Federal support for semiconductor manufacturing may be on the way.

By the end of next month, the U.S. House of Representatives expects to vote on a bill that could help to spur domestic production of semiconductors.

Introduced Jan. 25 as a response to the Senate's U.S. Innovation and Competition Act — which passed that chamber in June — the America Competes Act is intended to spur U.S. manufacturing, strengthen the manufacturing sector to better compete with China and address supply chain concerns.

While there are several key differences between the two proposed pieces of legislation — namely the House's elimination of $200 billion for technological innovation and scientific research — each includes $52 billion to support U.S. semiconductor manufacturing.

House Speaker Nancy Pelosi, D-Calif., called the America Competes Act "bold, results-oriented legislation."

"The America Competes Act reflects a whole-of-House effort, involving the deep expertise of chairs, members and staff across our committees to produce a historic bill that will be most effective at strengthening our competitiveness at home and abroad," Pelosi said. "Now is the time to recommit to boldly and strategically investing in our nation's future, and to do so in a way that strengthens the supply chain, lowers costs and ensures that America can out-compete any nation, today and for decades to come."

Jay Timmons, president and CEO of the National Association of Manufacturers, praised the America Competes Act, saying it represented a strong bipartisan effort to invest in manufacturers and boost the American economy.

"The introduction of the America Competes Act, which includes many components of the overwhelmingly bipartisan U.S. Innovation and Competition Act, is a major step forward," Timmons said in a Jan. 26 statement. "Not only would its provisions help address inflation and alleviate supply chain challenges we're facing today, but the bill provides significant investment in U.S. semiconductor manufacturing, which would also help us avert future crises.

"We will work to get it passed through the House and then work with the Senate to ensure that final legislation achieves the critical shared goals of this bill and the U.S. Innovation and Competition Act and makes it to the president's desk," Timmons said.
 

In a news release issued the same day the America Competes Act was introduced, the U.S. Department of Commerce emphasized the need for investment in semiconductor manufacturing, releasing findings from "Risks in the Semiconductor Supply Chain" Request for Information.

According to the Commerce Department, the median inventory held by chips consumers, including automakers and medical device manufacturers, fell from 40 days in 2019 to five days in 2021.

In that same time, demand for semiconductors rose by as much as 17 percent, Commerce found. Meanwhile, semiconductor facilities are operating at or above 90 percent utilization, leaving little room to help meet the growing demand.

"The semiconductor supply chain remains fragile, and it is essential that Congress pass chips funding as soon as possible," Secretary of Commerce Gina Raimondo said in a statement. "With sky-rocketing demand and full utilization of existing manufacturing facilities, it's clear the only solution to solve this crisis in the long term is to rebuild our domestic manufacturing capabilities."

President Joe Biden, in a statement issued during a White House ceremony Jan. 21, noted that the U.S. manufactured 40 percent of the world's semiconductors in 1990.

"But since that time, something happened. American manufacturing — the backbone of our economy — got hollowed out," Biden said. "Companies moved jobs and production overseas, especially from the industrial Midwest. … Today we barely produce 10 percent of the computer chips, despite being the leader in chip design and research. And we don't have the ability to make the most advanced chips now —r ight now."

Biden noted that East Asia today produces 75 percent of the world's semiconductors, and more than 90 percent of the most advanced microchips are sourced from Taiwan.

Biden's comments came the same day that Intel Corp. unveiled plans to invest $20 billion in a microchip manufacturing campus in Central Ohio, not far from the state's capital city of Columbus.

Intel's is the latest in a series of announced investments that will boost semiconductor manufacturing capacity in the U.S. According to a White House fact sheet, the semiconductor industry has in the last 13 months pledged to invest $80 billion in new investments in the U.S. by the dawn of 2026. These include:

• Intel's $20 billion Ohio investment;

• Texas Instruments investing up to $30 billion in Texas;

• A new Global Foundries factory in New York state;

• Cree's intention to spend $1 billion to expand a current plant in North Carolina;

• SK Group investments in a new U.S. R&D center; and

• Micron's planned expansion of U.S. production.