Commerce Secretary urges House to pass chip subsidies

U.S. Commerce Secretary Gina Raimondo urged the House of Representatives to immediately pass a bill that includes roughly $52 billion of incentives for the semiconductor industry at a Monday roundtable discussion outside Detroit.

The billions of incentives would help reduce U.S. dependence on foreign sources of semiconductor manufacturing, which could help avert future disruptions in the chip supply, Raimondo said. The shortage of chips has cost the auto industry hundreds of billions in lost revenue, and triggered plant shortages in the U.S. and elsewhere in the world.

Raimondo noted that the U.S. was once a chip manufacturing leader, accounting for 37% of global production in 1990, according to the Semiconductor Industry Association. But it now accounts for 12% of global production, and produces none of the most advanced chips.

“If we are serious about increasing American competitiveness, protecting our national security, and hitting President Biden’s electric vehicle goals, it is imperative that we reinvest in this critical industry and ensure that more chips are made here at home,” Raimondo said.

The roundtable included Democratic lawmakers, union representatives, and Michigan Governor Gretchen Whitmer, among others.

Lawmakers have packaged the $52 billion worth of incentives, called the Creating Helpful Incentives to Produce Semiconductors for America Act, or CHIPS Act, inside the U.S. Innovation and Competition Act which passed the Senate earlier this year, but has stalled in the House. The CHIPS Act includes provisions that would help boost domestic chip manufacturing, design, and research.

“We need the House to pass the Chips Act immediately,” Raimondo said at a separate event Monday, at the Detroit Economic Club.

Semiconductor shortages have hampered a range of industries because an increasing number of consumer goods use chips. But the automakers have been especially hard hit, and consulting firm AlixPartners has estimated the industry will lose $210 billion in revenue this year as a result. Newer cars also tend to use more chips to help power systems such as assisted driving and electric and hybrid propulsion systems.