Push to pass federal semiconductor funding picks up steam
Washington — Advocates for the semiconductor chip industry blanketed Capitol Hill offices this week to push for passage of $52 billion in subsidies amid an ongoing global shortage.
Their efforts appear to be paying off: More than three dozen bipartisan members of Congress from auto manufacturing states urged House leadership on Thursday to pass funding for chip production, and the 58-member bipartisan Problems Solvers' Caucus endorsed passage Thursday afternoon.
In a letter led by Michigan Reps. Debbie Dingell, D-Dearborn, and Fred Upton, R-St. Joseph, members told House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy that there is an "urgent need" for lawmakers to pass $52 billion in funding for semiconductor chips, including $2 billion set aside for chips that would be used in autos.
The legislation passed the Senate in June and has been sitting idle in the House for months, while a global shortage of semiconductor chips is expected to cost the industry 7.7 million vehicles in lost production and $210 billion in revenue this year, according to consulting firm AlixPartners.
"The ongoing semiconductor shortage is hurting the automotive industry, American workers, and our nation’s competitiveness by the hour," the lawmakers wrote.
"While you have already heard from many members on the critical need to address this ongoing supply chain crisis, we are sending this letter to reinforce the dire consequences the automotive industry as a whole — and the nation — faces if we fail to advance legislation soon that would fully fund the CHIPS Act and provide the necessary support for the industry at the same time."
The letter was signed by several other Michigan House members, including Democratic Reps. Andy Levin of Bloomfield Township, Elissa Slotkin of Holly, Dan Kildee of Flint Township, Brenda Lawrence of Southfield and Haley Stevens of Rochester Hills and Republican Rep. Peter Meijer of Grand Rapids Township.
The lawmakers' letter comes as chip manufacturers, including Intel, IBM, Qualcomm, GlobalFoundries and their advocacy group, the Semiconductor Industry Association, are meeting virtually with the offices of more than 100 lawmakers this week to push for investments in the industry.
"Leaders in Washington from across the political spectrum agree it’s a national priority to boost domestic chip production and innovation. Funding the CHIPS Act and enacting a semiconductor investment tax credit would turbocharge U.S. leadership in essential, chip-enabled technologies, while also fortifying America’s economy and national security," said SIA CEO John Neuffer in a statement.
"We continue to urge Congress and the Administration to prioritize getting these critical initiatives across the finish line in the weeks ahead.”
The global shortage began early last year amid the coronavirus pandemic, exacerbated by surging demand for electronics and disruptions in a tenuous supply chain. It caused plants to temporarily shut down, leaving a supply crunch that has frustrated automakers and dealers.
"If this shortage is further prolonged, we fear more assembly plants will be faced with temporary shutdowns or long-term disruptions, and more workers will suffer furloughs or even layoffs," the lawmakers wrote. "In addition, consumers are experiencing long-delayed delivery orders and dramatic increases in vehicle prices."
The Problems Solvers' Caucus, a group of moderate House lawmakers who work together on key issues and includes Upton, Dingell, Stevens, Slotkin and Meijer, also voted to endorse the legislation at the urging of Dingell and Stevens.
"Time is of the essence and now is the time to act on this national priority," the group said in a statement.
Consumers come into contact with semiconductor chips in nearly every aspect of their daily lives, from cell phones to coffee makers and other appliances. Auto manufacturers use thousands of chips in vehicles to control power steering, infotainment displays and more.
The pandemic has highlighted several supply chain weaknesses, including in semiconductor chips. In 1990, the U.S. made more than a third of the world's chip supply. Today, it accounts for only around 12%.
The funding for semiconductor chips that passed the Senate in June was included in a larger package aimed at increasing competition with China. The bill would direct the Department of Commerce to establish a program for administering grants for domestic semiconductor production.
The legislation is supported by major U.S. auto manufacturers and the advocacy group Alliance for Automotive Innovation said at the time the legislation indicates that lawmakers understand and are prioritizing a "critical issue."
However, experts have said there's no short-term fix for the shortage — bringing new factories online takes years, so the crunch is likely to persist even if funding for domestic production is expedited.
The lawmakers from auto states acknowledged this in their letter, arguing that "because of the long timeframes involved, we must begin to implement these long-term measures immediately."