Chip, auto groups urge Congress to get moving on CHIPS Act

chip shortage graphic
The auto and chip industries are pushing Congress to enact a measure with billions in funding for new chip plants in the U.S. Even quick passage would mean years before new plants are ready. (Getty Images)

Chip industry leaders and a group of 19 major business and labor groups sent a letter Thursday to Congressional leaders to urge passage of legislation to fund U.S.-based chip manufacturing and research.

The letter carries a tinge of impatience over failure of the House to act on a bill passed June 8 by the Senate to approve $52 billion in funding for the CHIPS for America Act. “The need is urgent and now is the time to act,” the letter states. “We look forward to working with you on this national priority.”

The group also wants an investment tax credit as provided in the FABS Act to help build and modernize more semi manufacturing plants in America.

In addition to the Senate’s action on CHIPS, the Biden administration has supported the CHIPS funding and included it in its budget request for the coming fiscal year.

“These initiatives will help grow the U.S. economy, create hundreds of thousands of good-paying middled-class jobs in advanced manufacturing and other fields, unleash billions in private-sector investments, assure the supply of critical components essential to virtually all sectors of the economy and strengthen our national security,” the letter adds.

It is signed by two large chip industry associations -- the Semiconductor Industry Association and SEMI -- along with the U.S. Chamber of Commerce and several groups connected to the auto industry that has been hurt by the chip shortage.  They include the Alliance for Automotive Innovation, the Truck & Engine Manufacturers Association, the Motor & Equipment Manufacturers Association. A union group, the North America Building Trades Unions, was also a signatory.

SIA and SEMI have conducted one of their largest lobbying campaigns ever in connection with the legislation in recent months. SIA again noted in a statement timed with the letter that the U.S. share of global semi manufacturing capacity has decreased from 37% in 1990 to 12% today. “This is largely due to substantial subsidies offered by the governments of our global competitors, placing the U.S. at a competitive disadvantage in attracting new construction of fabs,” SIA said in a statement.

Also, federal investment in semi research has remained flat as a share of GOP while other governments including China, SIA and Boston Consulting Group have noted.

The CHIPS Act was introduced June 11 in the House by U.S. Rep. Michael McCaul, R-Texas, and was assigned to several committees led by Science, Space and Technology.  The House and Senate are still negotiating over infrastructure appropriations measures which could ultimately affect chip appropriations.

While the need for more chips for auto production and other supply chains is indeed urgent, it is estimated it would take two or more years to build new U.S. chip plants that can cost $8 billion or more apiece.

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