Swift Chips Deal Needed to Keep US Investments Moving Overseas: Raimondo

Commerce Secretary Gina Raimondo and some Senate Commerce Committee members used a Wednesday hearing on the Commerce Departments FY 2023 budget goals (see 2204210059) as a platform to press Congress to move swiftly to reach an agreement marrying elements of the House-passed America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength Act (HR-4521) and Senate-passed U.S. Innovation and Competition Act (S-1260). Committee members also pressed Raimondo on NTIA’s plans for distributing $48 billion in broadband money from the Infrastructure Investment and Jobs Act and how to improve interagency spectrum coordination.

“I cannot say strongly enough the urgency with which we must act” to reach an HR-4521/S-1260 compromise due to the measure’s importance to bolstering U.S. semiconductor production, Raimondo told Senate Commerce. Both measures include $52 billion in subsidies to encourage U.S.-based semiconductor manufacturing (see 2201260062) but differ in other areas. House and Senate conference negotiations to marry the two measures were expected to formally begin this week, Senate Majority Leader Chuck Schumer, D-N.Y., said Monday.

China and “other countries aren’t waiting for us” to catch up on chipmaking, Raimondo said: “I don’t think it’s an exaggeration to say this is a national emergency. It’s threatening our national security as well as our economic security.” Germany, “Singapore, Spain, France” along with China “are all right now … wooing” Intel and other U.S. companies “to set up facilities in their countries” to make chips, she said. Those companies’ CEOs have told her “they want to operate in America but they cannot wait because demand for chips is up 20%” from “where it was a couple of years ago. They are going to build and if we don’t act quickly” on a HR-4521/S-1260 compromise “they’ll build elsewhere. If we do act quickly, they’ll build here.”

“Other people are moving faster than we are” in increasing chip production, said Senate Commerce Chair Maria Cantwell, D-Wash. “The faster they move, the more the money follows. And so I really am worried that even investments that people have announced” in U.S. chip production like Intel’s plan to spend $20 billion to build manufacturing facilities in central Ohio (see 2201210085) could be jeopardized. “The longer we don’t send that signal” via a compromise innovation bill, “the more that that investment may not go to Ohio,” she said. “It may go over to Germany or some place else.”

Senate Commerce ranking member Roger Wicker, R-Miss., agreed “the chips issue is a national security issue” and sought to assuage some colleagues “who object to the grants” because recipients could be “big companies, some of them do business in China.” It’s “important to follow the approach that’s in” S-1260 to prevent chips money from going overseas, he said. Raimondo emphasized that her “top priority will be protecting taxpayers,” noting “there are clawback provisions” in the measure aimed at preventing the funding from being used in other countries. “If this money were to be used by companies that are violating our export controls, we will claw the money back” and “the money cannot be used to build facilities in China,” she said.

Senate Homeland Security Committee Chairman Gary Peters, D-Mich., believes “it’s essential” that Congress enact the $52 billion for U.S. chip manufacturing “so that we can grow good-paying jobs here in America” and support existing jobs “that depend on those semiconductor chips.” He’s “going to be fighting to ensure” an HR-4521/S-1260 deal includes language from his Investing in Domestic Semiconductor Manufacturing Act (HR-6359/S-3331) aimed at ensuring federal incentives to boost domestic semiconductor manufacturing include U.S. suppliers that produce the materials and manufacturing equipment that enable semiconductor production. Peters emphasized his support for HR-4521/S-1260 compromise language that set aside $2 billion specifically for growing U.S. chipmaking for “mature semiconductor technologies,” including for the auto industry.

S-1260 lead GOP sponsor Sen. Todd Young, R-Ind., cited the measure’s language to establish regional tech hubs as “one of my top priorities” given the impact it would have “on non-coastal, non-traditional areas” of the U.S. “We have incredible talent across this country,” he said. “It just needs to be harnessed.” Much of the attention on the HR-4521/S-1260 talks has been on the chips funding, “but the tech hubs are every bit as important,” Raimondo said. “They’re designed to create ecosystems of innovation in areas of the country that have been overlooked” but already have pools of research and entrepreneurial resources. “We need to start increasing our innovation in all emerging technologies” and “it isn’t all going to happen in Silicon Valley, Boston and Austin, Texas,” she said.

The House passed the Protecting Semiconductor Supply Chain Materials from Authoritarians Act (HR-7372) Wednesday 414-9 and was to vote that afternoon on the Transatlantic Telecommunications Security Act (HR-3344). HR-3344 and Senate companion S-2876 would aid Central and Eastern European countries to build 5G networks using equipment not made by Chinese manufacturer Huawei, including by authorizing U.S. International Development Finance Corporation financing for infrastructure development. HR-7372 would create a working group for reporting on the semiconductor supply chain disruptions caused by Russia’s invasion of Ukraine.

Reps. Anna Eshoo, D-Calif., and Greg Pence, R-Ind., filed a House companion to the Senate Commerce Committee-cleared Securing Semiconductor Supply Chains Act (S-3309) Tuesday. The measure, which Senate Commerce advanced in December (see 2112150069), would direct the U.S. Department of Commerce’s SelectUSA program to work with state-level economic development organizations to develop strategies to attract investment in U.S. semiconductor manufacturers Hand supply chains.

Disruptions in the semiconductor supply chain "have impacted nearly every aspect of our economy and the daily lives of Americans,” Eshoo said. “Our Country has had to learn the hard way that relying on foreign supply chains jeopardizes our economic and national security,” Pence said. “There are other nations who know this, wanting to outpace our economy and chip away at our hold as a global superpower, and take advantage of this fact. America cannot be caught off-guard again, and this legislation would address that shortcoming.”