Semiconductor Industry Push For Domestic Manufacturing Heats Up

Issue 21

06.01.20 - As tensions with China continue to rise, the American semiconductor industry is gearing up for a major lobbying push to obtain billions of dollars in federal funding and support for factory building as well as research & development to keep the U.S. ahead of China and other countries that heavily subsidize their chip industries.

The $37 billion in proposals from the Semiconductor Industry Association (SIA), a trade group, includes subsidies for the construction of a new chip factory, aid for states seeking to attract semiconductor investment and an increase in research funding, according to a draft of the proposals, the Wall Street Journal reported.

The push comes as the Congress and The White House try to grapple with two challenges: reducing Western dependence on Asia for technology products and competing effectively with China.

The growing tension with China “has moved the dynamic toward accepting a national industrial strategy,” said Robert Atkinson, president of the Information Technology & Innovation Foundation, an industry think tank. “In the old days, it was about protecting steel. The consensus now is much more about helping sunrise industries,” referring to those pursuing advanced technology.

Industry officials consider expected legislation with additional coronavirus relief funding, the annual National Defense Authorization Act and some emerging technology bills as potential vehicles for the proposals.
While it is unlikely that the SIA’s recommendations will be fully accepted without modifications, some influential lawmakers and administration officials, including Secretary of Commerce Wilbur Ross and Secretary of State Mike Pompeo, are examining ways to help the industry.

In Congress, a bipartisan group of lawmakers including Senate Minority Leader Chuck Schumer (D., N.Y.) and Sen. Todd Young (R., Ind.) have proposed a $110 billion boost in technology spending that would include semiconductor research. Other lawmakers are also putting together bills that mirrors some of the SIA’s proposals.

In the long run, these industries will become self-sustaining. Silicon Valley was essentially built on government contracts, and then giants like Oracle, Intel, Google, and the thousands of tech companies that followed went on to service the world at large as a private sector that is larger than the GDP of France. It is both at the interest of US national security and in our economic interest to ensure that the United States and its Allies continue to lead the world in technological leadership. Something can only be sustained through the ownership and control of these critical supply chains.

Source: Wall Street Journal