Biden pushes Congress to pass $52 billion for chip production

Riley Beggin
The Detroit News

Washington — President Joe Biden pleaded Friday for Congress to pass $52 billion in funding for semiconductor chip production amid an ongoing shortage that's driving up prices of cars, tech and other consumer goods. 

Earlier Friday, Intel Corp. announced it would spend $20 billion to build a new chip production facility near Columbus, Ohio. The company's CEO, Patrick Gelsinger, joined Biden to tout the investment. 

President Joe Biden speaks in the South Court Auditorium in the Eisenhower Executive Office Building on the White House Campus in Washington, Friday, Jan. 21, 2022. With the President are Commerce Secretary Gina Raimondo, left, and Sen. Rob Portman, R-Ohio, right.

"I want other cities and states to be able to make announcements like the one being made here today. And that's why I want to see Congress pass this bill right away," Biden said.

"Let's do it for the sake of our economic competitiveness and our national security. Let's do it for the cities and towns all across America working to get their piece of the global economic package. And let's do it for the dignity and pride of this country and the American worker."

The speech followed weeks of meetings between Commerce Secretary Gina Raimondo and bipartisan lawmakers as the administration worked to rally support for the funding. House Speaker Nancy Pelosi, D-California, on Friday announced in a letter to fellow Democrats that the House would soon be introducing its own version of the chip legislation, which passed the Senate last summer. 

Approving the funding is a priority for many of Michigan's members in Congress and for major automakers, which have lost hundreds of billions of dollars in lost revenue and millions of units of lost production over the past two years due to the global, pandemic-induced chip shortage. Consumers have felt the impact as well, as new and used vehicle prices soared in 2021.  

Supply chain problems exposed by the pandemic have pushed policymakers and businesses to explore ways to stabilize their chip sources. That stability is only expected to become more crucial for automakers as electric vehicles become a larger share of auto sales, because EVs require far more chips than gas-powered cars. 

Gelsinger estimated Friday that chips will account for 20% of the total cost of a vehicle by 2030 as opposed to 4% today. 

The administration has framed the spending as crucial for ensuring the United States can compete with its chief economic rival, China, on the international market. China has become a major global investor in research and development over the past several decades while the U.S. has fallen behind, Biden said. 

"China is doing everything it can to take over the global market so they can try to out-compete the rest of us," he said. "We have a stiff economic and technological competition. ... We're going to invest whatever it takes in America, and American innovation, and American communities and American workers."

The auto industry has consistently pushed for speedy passage of the funding. Experts acknowledge it will take time for chip production facilities known as fabs to get up and running once the spending is approved, but industry advocates have argued any aid will ease the pressure and prevent similar shortages in the future. 

"The automotive industry is working toward a cleaner, safer, and smarter transportation future," said John Bozzella, CEO for the Alliance for Automotive Innovation. "A sustained commitment to investing in and building additional domestic semiconductor capacity that meets the current and future needs of the auto industry in the United States is absolutely essential."

The Senate approved the $52 billion in funding last summer through the U.S. Innovation and Competition Act, a larger bill aimed at increasing competitiveness with China. The bill includes $2 billion set aside for "legacy" chips used by automakers, a provision pushed for by Michigan Sens. Gary Peters, D-Bloomfield Township, and Debbie Stabenow, D-Lansing. 

But it has stalled in the House, where some Republican members have argued it's not tough enough on China and other differences between the two chambers' priorities have prevented movement. Once the House introduces its version of the legislation, the two chambers will attempt to reconcile their differences, which Pelosi has expressed confidence is possible.

Twitter: @rbeggin