On State of the Union night, Senate Republican leader Mitch McConnell (R-Ky.) complimented Commerce Secretary Gina Raimondo on a recent write-up about restoring the United States as world leader in the manufacture of advanced semiconductor chips.
The manufacture of such chips is crucial to an array of industries. From factories, cars, appliances, and electronics to toys, toothbrushes, and even weapons systems. Moreover, it’s a field where both Republicans and Democrats are on the same page in terms of the need for global supremacy.
An article by George Will in the Washington Post on Feb. 1. spoke favorably of Raimondo’s outlined plans, which were highly commended by McConnell.
“Thank you. I’m going to implement that and I’m going to do it responsibly,” Raimondo said of the $52 billion approved last year for research and the construction of semiconductor factories, emphasizing the importance of national security on the matter.
“That’s why I voted for it,” McConnell said.
Following the announcement by several chip companies to build U.S. factories, Raimondo is set to deliver on the government’s promised financial commitment. The application process for semiconductor firms seeking to qualify for $39 billion in government backing will start next week.
Chips are embedded circuits in semiconductors. Made mostly from silicon, they manage the flow of electric current. Both terms are colloquially used interchangeably.
The commerce secretary intends to outline plans in an upcoming speech at Georgetown University, for the development of two major semiconductor clusters inside the United States. This would include an array of infrastructure, namely a network of factories and research laboratories.
This vision, however, can only be materialized by training tens of thousands of workers and achieving scientific breakthroughs to lower production cost.
“There have been times in history where a president used the pursuit of a goal, a technological goal, like putting a man on the moon, like leading the world in nuclear technology, to catalyze the whole country to do their part in achieving that goal,” Raimondo said in an interview.
She added that to succeed, the United States needs a collective effort, incorporating the whole-of-society, comparable to previous endeavors, like mobilization during World War II or the space race. It needs to be a collaborative effort—a make-or-break moment—for the nation with the world’s largest economy and military.
“We need to mobilize America,” Raimondo said.
The $39 billion influx for factories will likely generate a minimum of 10 times the investment in the private sector.
Additional benefits will stem from spillover effects of computer chip production, such as jobs that pay over $100,000 annually, effectively creating enhanced economic activity.
Raimondo added that there is an urgent need for the Biden administration to get universities to double the number of electrical engineers over the next decade.
There is also a requirement for community colleges and high schools to increase efforts to team up with relevant companies. This would facilitate the next generation of workers, who are trained and proficient to segue into these jobs.
Included in the new law, is a research fund of $11 billion that will enable companies, universities and national laboratories to partner up with the mission of increasing a chip’s processing power and lowering the cost of semiconductors so that there are buyers in a global market.
“We have to bring down the cost—big time—which means innovation, innovation, innovation,” Raimondo said.
The funding, however, has sparked some concern from critics, who worry that without proper administration and monitoring, the money will not guarantee the desired results and even cause economic distortions.
According to Anthony Kim, a research fellow at the conservative Heritage Foundation, “the CHIPS Act is a work in progress to say the least.”
“Spending more is not and cannot be a solution, particularly in the current economy environment where inflationary pressures are still abundant,” he asserted.
Despite the promise of government support, the process is still in its early stages and is likely to take years to materialize.
According to the White House, some major players in the industry, such as TSMC, Intel, Micron, IBM, and others have so far committed to roughly $200 billion for investments in new plants.
Texas Instruments recently announced an $11 billion investment to expand its semiconductor production in Utah.
There is a current surplus of chips available, following a shortage after the world economy’s recent emergence from the coronavirus pandemic. White House officials have indicated their long term goal is to target sectors in which global demand will be greater than available supply, while ensuring protection of technologies aimed at more precise weapons and battlefield communications.
