Biden touts chip funding at virtual appearance at Hemlock Semiconductor

Riley Beggin
The Detroit News

President Joe Biden on Tuesday touted $52 billion in funding for domestic semiconductor chip production during a remote appearance at the Hemlock Semiconductor outside of Saginaw.

He had planned to visit Michigan in person, but appeared remotely instead after testing positive Saturday for COVID for the second time in less than two weeks. 

"The auto industry is the heart and soul of the nation... it's about the future, it's about America's future," Biden said. "One of the reasons why I'm so excited about CHIPS and Science Act is that it sees a future for decades to come."

The event coincided with Democratic Gov. Gretchen Whitmer signing an executive directive to ensure the state "is ready for the influx of resources" appropriated through the new legislation, according to the directive.

The executive directive requires state agencies to review the new legislation and move to maximize Michigan's allocation of federal funds, to prioritize permitting related to semiconductor projects and to work with the industry to attract private-sector investment in the state.

"We know that it's important for us to make things in America. I knew the impact that this would have on Michigan and I am incredibly proud to see it passed," Whitmer said of the federal funding in the legislation. "With the executive directive that I will sign shortly, we will compete for every project, every program and every resource."

Congress approved bipartisan legislation on Thursday that will allocate $52 billion for companies to build microchip manufacturing facilities in the U.S., including $2 billion in subsidies set aside for "legacy" chips used in vehicles.

The bill also includes $24 billion in tax credits for the chip industry and $100 billion over five years for research programs through the National Science Foundation. 

It is considered a major win for the automotive industry, which has struggled for the last two years under a global shortage of chips, and for national security advocates who say the U.S. is falling behind its chief economic rival, China.

It enjoyed the full-throated support of the Biden administration; leading automakers including the Detroit Three and Toyota Motor Corp.; the United Auto Workers and other labor advocates; tech companies like Apple, Microsoft and Google; the governors of eight auto-producing states including Michigan; and, of course, chip companies like Intel Corp., Samsung Electronics Co., GlobalFoundries Inc., Taiwan Semiconductor Manufacturing Company Ltd. (TSMC) and Texas Instruments Inc. 

Modern cars rely heavily on microchips to roll down windows, power infotainment systems and support steering. Electric vehicles require even more chips. Automakers had to cancel shifts and store vehicles until enough chips were available to sell them, contributing to the skyrocketing prices of new and used vehicles. 

The U.S. produces only 12% of the world's microchips, compared with 37% in the 1990s. Around three-quarters of the world's chip manufacturing capacity is in east Asia, and more than 90% of the world's capacity for the most advanced chips is in Taiwan, which faces possible military incursions from China. None of the most advanced chips are currently produced in the U.S. 

The Semiconductor Industry Association estimates it costs 30% more to build a chip fab in the U.S. than in Taiwan, South Korea or Singapore and up to 50% more than in China. 

Proponents of the legislation on both sides of the aisle argued that other countries are offering lavish incentives for chip companies to build there, and that the U.S. is missing out on important investment if they don't compete with those offerings. 

Critics argued the legislation amounted to "corporate welfare" for an already-profitable industry and warned that it could push other industries to use competition with China as an excuse to get access to taxpayer dollars.

The bill also faced last-minute opposition from Republican leadership angered by a Democratic political maneuver to advance party-line climate and tax policy put forward late last week.