Apple, Intel, Ford Executives Urge U.S. To Give Chip Subsidies


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A wide range of companies that buy and sell chips, including Apple and Intel, are calling on Congress to pass legislation that would offer billions of dollars in subsidies to US factories during a global chip shortage.

Executives from more than 50 companies sent a letter to Democratic and Republican leaders urging Congress to pass the CHIPS Act, which would provide $ 52 billion in subsidies for the production, design and research of chips in the United States. the country’s dependence on imported chips from Asia and could help the United States avoid future disruptions in its chip supply chains.

They are also urging Senate and House of Representatives leaders to pass a separate law called the FABS Act, which provides an investment tax credit for investing in US chip factories.

The letter, written by the Semiconductor Industry Association, was signed by more than 50 executives, including Mary Barra of GM, Jim Farley of Ford, Pat Gelsinger of Intel, Jensen Huang of Nvidia and Lisa Su of AMD.

Executives pointed to the current global chip shortage that has caused the shutdown of US auto factories and production of goods such as Apple’s iPhone, proof that the country needs to further outsource its chip supply chain. They warned that the shortage of chip factories in the United States poses a threat to supply chain stability that could outlast current manufacturing and logistics bottlenecks around the world.

“Semiconductors are essential to virtually every sector of the economy,” the letter says.

“Unfortunately, the demand for these critical components has exceeded supply, creating a global shortage of chips and leading to loss of growth and jobs in the economy,” the executives added. domestic manufacturing capacity.

Flea drought

Production delays have led to a severe global chip shortage causing chaos in an array of industries. Stocks of chips have been depleted as demand for devices, from smartphones to cars, increases, resulting in record times. The prices of many chips are also on the rise due to the scarcity of raw materials and silicon wafers. Other challenges businesses face are shipping delays and high transportation costs.

Industry executives say the stresses are likely to persist in the first half of 2022 and ease into the second half.

The parts shortage has sparked calls, including from President Biden and Commerce Secretary Gina Raimondo, for increased production of chips in the United States as part of strengthening supply chains for technologies in industries such as the automobile. The chip shortage has hit the auto industry harder than any other industry this year

Today, many US semiconductor companies are factoryless and leave the production of their most advanced chips to chip foundries such as TSMC and Samsung. As a result, much of the chips sold by US suppliers are imported from foundries halfway around the world, mainly in China and South Korea. Other key parts of the supply chain, such as packaging and testing, are also clustered outside of the United States.

The letter was also signed by executives from chip industry giants such as Synopsys and Applied Materials, as well as other companies that have been hit by the global chip shortage, such as Cisco, HP and Dell.

“The shortage of chips poses risks to our entire economy and time is running out,” the letter said.

Mostly not made in the USA

Chipmakers have long warned that the United States is falling behind in developing its semiconductor industry, in part because of soaring costs to build and operate a chip factory in the States. -United compared to other countries.

Industry executives said companies had been drawn out of the United States by a combination of factors such as cheaper labor and larger subsidies for chipmaking factories. They argue that there is a need to make building factories more affordable for businesses and to prevent the U.S. share of production from falling more than it has already.

Today, just over 10% of all chips are made in the United States, up from almost 40% in 1990.

The letter warned that time is running out to bring more of the chip supply chain to the United States. Expanding chip production capacity takes tens of billions of dollars, thousands of skilled workers, and months or years to build factories. Failure to obtain financial assistance could lead companies to locate factories outside the United States

Near the finish line

The White House has said chips are a top priority, and President Biden has called for billions of dollars in federal grants to bolster US self-sufficiency in chips. But he struggled to get through Congress.

The CHIPS Act would offer $ 52 billion in subsidies and other incentives to invest in chip factories in the United States. It would also establish a national semiconductor technology center for research and development. The bill was passed by the Senate in June with bipartisan support as part of another bill called the US Innovation and Competition Act. But he’s been stuck in the House of Representatives for months.

In mid-November, Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi announced a deal to negotiate a new version of the bill that could pass both the Senate and the House.

Industry leaders are also pushing for the Facilitating American Built Semiconductors Act (FABS), which was introduced in the Senate and would enact an investment tax credit for American factories and chipmaking equipment. The letter also urged Congress to expand the FABS law with provisions to also fund semiconductor design.

“We call on you to prioritize actions to help strengthen the US semiconductor ecosystem,” the letter reads.

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