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Lawmakers Seek to Bolster U.S. Microchip Industry



Gloved Hand Holding Piece of Technological Wonder | Lawmakers Seek to Bolster U.S. Microchip Industry | Featured

A bipartisan effort to strengthen the U.S. microchip industry is gaining momentum in Congress.

Lawmakers introduced a plan to provide billions of dollars in federal money to fund domestic microchip manufacturing and research initiatives. The bipartisan push is part of a wider effort to strengthen domestic supply chains and lessen the country’s dependence on Chinese imports. Sens. John Cornyn (R-TX) and Mark Warner (D-VA) brought the bill to the Senate floor on Wednesday. Representatives Michael McCaul (R-TX) and Doris Matsui (D-CA) will sponsor the House’s version of the bill. “As the Chinese Communist Party aims to dominate the entire semiconductor supply chain, it is critical that we supercharge our industry here at home,” said Rep. McCaul.

If approved, the bill would establish a $10 billion federal program to match state and local incentives for semiconductor factory construction. It also allocates $12 billion for research and development. The R&D portion of the bill includes $2 billion for a Department of Defense program to develop cutting-edge microchips; $5 billion for basic federal research programs; and $5 billion to support the microchip manufacturing process. The legislation also includes tax cuts and other wide-ranging incentives.

The Push For Incentives

Chip industry lobbyists have been pushing Congress to offer more incentives for microchip manufacturers that open stateside factories for quite some time. Other countries – including China – typically offer attractive incentives for chip manufacturers, but the U.S. has lagged behind.

The Semiconductor Industry Association says the U.S. needs to step it up in order to compete. In a published statement, the SIA said, “Significant semiconductor manufacturing incentives have been put in place by other countries, and U.S. semiconductor manufacturing growth lags behind these countries due largely to a lack of federal incentives.” Experts believe government incentives have helped fuel the microchip industry’s mass exodus to Asia over the past few decades.

The issue has gained traction since the U.S.-China rivalry began heating up in recent years. Lawmakers are  also actively looking for ways to support the U.S. chip industry, and growing U.S. production is one of the Trump Administration’s top economic priorities. President Trump and several prominent lawmakers see semiconductors as an important point of contention with China, and recent pandemic-related supply chain disruptions have underscored the need to address the matter quickly.

The Microchip and the Country's Technical Prowess

Chips are already vital components in thousands of products. However, they’re going to become even more ubiquitous in the coming years. A steady supply of advanced microprocessor chips will be essential to America’s efforts to deploy the next generation of advanced technology. This also includes artificial intelligence, 5G networking, and internet-of-things. The U.S. has to shore up its domestic supply chains. Otherwise, it runs the risk of falling behind China in the race to develop these technologies.

Sen. Warner said America’s complacency has allowed our international competitors to catch up with our technological prowess. “The bill reinvests in this national priority,” he said. The bill’s Republican sponsor, Sen. Cornyn, pointed out that the legislation would also help secure U.S. semiconductor supply chains and help the country keep its edge in chip design while creating more jobs. A bipartisan group of senators including Sens. James Risch (R-ID), Marco Rubio (R-FL), and Kyrsten Sinema (D-AZ.) are also co-sponsoring the bill.

Republicans are typically hesitant to use federal money to fund industrial development. However, increasing competition from China is convincing many GOP lawmakers to change their tune. The change of heart has then led to a series of bipartisan efforts to bolster American industries against Chinese expansion. Another bipartisan measure sponsored by Senate Minority Leader Chuck Schumer (D-NY) and Todd Young (R-IN) proposes $110 billion in additional tech spending which includes funding for semiconductor research.

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