Dingell proposes $2 billion in federal semiconductor spending
Washington — The U.S. government would spend $2 billion on semiconductor chip manufacturing under a bill introduced Wednesday by Michigan Rep. Debbie Dingell, D-Dearborn.
The bill comes amid an ongoing semiconductor shortage that has forced shutdowns at auto plants and threatens to cut production by around 3.9 million vehicles globally by the end of the year, according to consulting firm AlixPartners, costing the industry around $110 billion in revenue.
“The chip shortage is hurting the auto industry, union workers, and our nation’s competitiveness by the hour," Dingell said in a statement.
“Robust funding for domestic semiconductor manufacturing is critical to ensure we stay at the forefront of innovation and technology — especially in the auto industry — and aren’t relying on international competitors for supplies."
Under the bill, the funding would specifically go to chip manufacturing for mature technology nodes — the type of chips that can be used in consumer and commercial vehicles. In comparison, a bill aimed at increasing competitiveness with China that passed the Senate in June includes $52 billion for chips, $2 billion of which would go specifically to mature technology.
Dingell's House bill mirrors that Senate effort. There are Republicans who would support the provisions, Dingell said, and she's working with leadership to move the legislation in the House.
While the chip crunch is having a major effect on automakers, she added, workers in particular are taking the heat.
"Unions have made the point that earnings are holding because the cost of vehicles has increased. But workers have been laid off because they're having to shut down production because of the lack of chips, and consumers are paying increased prices. Everybody's hurting," she said.
The United Auto Workers union supports the legislation, spokesperson Brian Rothenberg told The Detroit News.
Another group of bipartisan lawmakers led by Rep. Dan Kildee, D-Flint Township, is also urging the House to move ahead with semiconductor funding legislation. The group, which includes five Republicans and 12 Democrats, plans to send a letter urging action to Speaker of the House Nancy Pelosi and House Minority Leader Kevin McCarthy on Thursday.
The semiconductor shortage has been the focus of bipartisan concern in Washington, and the Biden administration has identified the chips as a critical supply chain vulnerability.
Two decades ago, the U.S. produced 37% of semiconductor chips globally; now that has fallen to just 12%. U.S. companies are dependent largely on companies based in Asian countries to supply the crucial component.
An increase in demand for consumer electronics amid the coronavirus pandemic collided with interruptions to existing chip supplies — including a fire at a Japanese semiconductor facility, severe weather in Texas and a drought in Taiwan — to create a chip shortage that has affected automakers and other industries across the globe.