The journey began a year ago, when the U.S. Senate passed a bill that raised the expectation for the United States to get back into the semiconductor manufacturing game.
Virginia Sen. Mark Warner spoke before the U.S. Senate Tuesday morning and encouraged passage of the revised and newly named Creating Helping Incentives to Produce Semiconductors (CHIPS) for America Act, originally introduced by Rep. Michael McCaul of Texas in June 2020.
CHIPS for America would establish investments and incentives to support the manufacture of semiconductors in the United States, as well as research, development and supply chain security.
Warner said passage is important “as quickly as possible so we can get it out of the Senate, get it over to the House and get it to the president’s desk. We cannot afford to waste any more time because this funding sends the message that the United States is putting a strong down payment on maintaining our edge in the global technology race and preventing global supply chains from being weaponized against the United States or, for that matter, against our allies.”
China has continued to increase spending in domestic industries, including semiconductors, which are needed in smartphones, laptops, washers, dryers and vehicles.
“Chips are an essential component in so many of the devices we use today,” Warner said. And the need for chips will continue to grow with technology. “For every connection, there needs to be a center — most of those requiring a semiconductor chip.”
The U.S. lost ground in semiconductors to the east Asian market. Warner said that in 1990, 37 percent of semiconductors were made in the U.S. Today, only 12 percent.
“On the other hand, China has ramped up its investment in chips, providing an estimated $200 billion in financial support between just 2015 and going forward projection up to 2025,” he said. Chinese orders for manufacturing equipment increased by 58 percent. By 2030, China’s goal is to produce 70 percent of semiconductors. “The truth is, it’s not just China. This is global competition.” France and South Korea are also invested in semiconductor manufacturing.
The challenge for the U.S., according to Warner, is that Taiwan has evolved faster with its manufacturing and the U.S. relies on Taiwan for most of its semiconductors. The possibility of subjugation of Taiwan could affect manufacturing and create, not just a recession, but world-wide depression.
When the bill was discussed and passed a year ago, Warner said it set off alarm bells for other countries that the U.S. would get into the semiconductor game again. Between 2010 and 2022, only 17 semiconductor manufacturing facilities were built in the U.S., while 122 were built elsewhere.
As chair of the Intelligence Committee, Warner said U.S. investment in semiconductor manufacturing is important, because the Communist Party of China is aware of the gap and will strive to lead production in the world.
“I firmly believe this is the start of technology competition,” Warner said.
The $52 billion investment with the CHIPS for America Act would create jobs for Americans. The bill would also provide semiconductors for the thousands of U.S. vehicles that are sitting on lots unable to be sold because they need the chips, and in return reduce inflation.
“We cannot be held hostage on this critical issue,” Warner said. The bill includes $1.5 billion to invest in 5G western alternatives. “In many ways, the U.S. has started to fall behind. Fortunately, it’s not too late to change that narrative or to change that result.” CHIPS for America Act will “lead the way on technologies that will define our future.”