Congressman Katko urges approval of $52 billion for U.S. semiconductor manufacturing

Republican Congressman John Katko has urged immediate action in authorizing a $52 billion federal investment in U.S. semiconductor manufacturing.

He warned that growing tensions with China over Taiwan could threaten crucial U.S. chip supplies manufactured in Taiwan and urged that more chips be manufactured in the United States.

“From autos to washing machines to medical devices, the products we depend on are built on semiconductors. The global chip shortage has exposed vulnerabilities in the semiconductor supply chain and highlighted the urgent need for U.S. government investments and incentives for domestic chip research, design, and manufacturing.” Semiconductor Industry Association

Speaking at a July 21st webinar sponsored by CQ Roll Call and the Semiconductor Industry Association (SIA), (R-NY) Congressman John Katko, (Co-Sponsor of the Creating Helpful Incentives to Produce Semiconductors for America (CHIPS) Act), urged Congress to act immediately.

He said the proposed $52 billion of federal funding for new manufacturing, research and development is vital to U.S. national security: “There is a real danger if we don’t act. That danger is if China decides to go into Taiwan tomorrow, we will have a worldwide crisis because China would have a high-end grip on the global chip market by controlling Taiwanese manufacturing. So, from a national security standpoint we need to bring that manufacturing back home. On top of that, why would we not want to bring that manufacturing back home?

$52 billion dollars is a lot of money, but if you think about how much money these companies will be investing in the United States, it’s stunning. So, this is both a national security and economic development investment that is hard to look away from. The time for talk is done, the fire bell is ringing. China is rattling its sword; we need to get going now. The tax incentive provisions coupled with the investment grants … would incentivize those companies to come to the United States. This is not a corporate handout by any stretch of the imagination.”

Katko’s concern is echoed by the American Trucking Association.

American Trucking Association (ATA) President & CEO Chris Spear has warned about the danger of semiconductor shortages to U.S. trucking: “The global chip shortage is having a heavy impact on the trucking industry and our ability to meet the economy’s growing freight demands. Thousands of unfinished heavy-duty trucks sit parked in lots across the country waiting for chip-enabled components, and tens of thousands of more existing trucks are sidelined waiting for repair parts.”

The webinar speakers included Steve Grasso, Managing Director, Global Government Affairs, Semiconductor Industry Association, he noted the importance of semiconductors in manufacturing existing cars and trucks and also in next generation vehicles: “The number of chips in automobiles has skyrocketed particularly in electric automobiles. Products will be become smarter and more connected and that will mean demand for even more chips. Projections are that global demand for chips will increase 56% by the end of the decade. So where will all of that manufacturing capacity go?

A typical new car will have approximately 100 semiconductors which is significantly more than it ever had. But now when you look at new electric vehicles, you’re looking at over 3,000 semiconductors. That’s just for one vehicle. What’s gotten so much attention recently is the automobile industry’s inability to ship vehicles because they can’t get enough semiconductors. This legislation allows for investment in all the different modes … leading edge and for legacy technologies.”

Congresswoman Doris Matsui (D-CA), Co-Sponsor of the CHIPS Act, also urged immediate action: “We simply cannot afford any more squabbling and political gamesmanship. In March, I led a bipartisan group of 147 members of Congress, calling for funding as soon as possible. We had progressives, conservatives, rural, and urban members sign that letter and I know we have the political will to get this done.”

Bruce Andrews, Corporate Vice President & Chief Government Affairs Officer, Intel Corporation warned that federal support of the semiconductor industry is crucial:

“U.S. market share has declined over the last 30 years, investments are flat, and we are facing an increasingly competitive global marketplace. Other countries governments are ramping up manufacturing incentives in R&D. We see countries around the world aggressively attracting investments to their countries. For U.S. companies to be successful we can’t operate in a 30-50% cost differential which is what we see in Asia and other countries. The rest of the world is working hard to build their semiconductor industries. And the U.S. has to match new production and innovation which has to occur in the United States. Intel has announced $43.5 billion dollars of investments in the United States. Of that, $20 billion is going to Arizona, $20 billion to Ohio, $3.5 billion in New Mexico. In order for those investments to be globally competitive, we have to have a partnership with the U.S. government, because we’re not just competing with companies, we are also competing against countries who have industrial policies that are very aggressive.”

John Neuffer, President and CEO, Semiconductor Industry Association, said that the United States is losing market share in semiconductors and needs to act quickly to restore competitiveness, “Unfortunately, America’s share of chip production has shrunk substantially in the last 30 years from 37% to 12%, because incentives offered by the governments of other countries have made it more attractive to build chip manufacturing facilities called fabs overseas.

But help could be on the way. Leaders in Washington are closing on legislation called the CHIPS Act and the FABS Act that would address these problems and boost U.S. based semiconductor manufacturing and private research. This would strengthen America’s economy and national security.”