House Should Pass Chips Act Now To Reduce Semiconductor Shortages

U.S. Commerce Secretary Gina Raimondo discusses the impact of a semiconductor chip shortage at UAW Region 1A’s Taylor, Michigan office on November 29, 2021.

Jeff Kowalski | AFP | Getty Images

DETROIT – Commerce Secretary Gina Raimondo on Monday urged the House of Representatives to immediately pass legislation supporting semiconductor chip manufacturing in the United States to avoid future supply disruptions and reduce the country’s dependence on components from China.

Speaking at Motor City, Raimondo took advantage of an ongoing global chip shortage that has depleted vehicle stocks and caused constant shutdowns in U.S. auto factories as proof that the country needs to maintain its supply chains for critical components like semiconductor chips.

“If we want to compete globally, we invest domestically, especially in the revitalization of the semiconductor industry,” Raimondo said during his speech Monday at the Detroit Economic Club. She noted that US chip assembly accounts for only 12% of global production, up from 40% in the 1990s.

The United States Innovation and Competition Act, or USICA, was passed by the Senate with bipartisan support in June, but has stalled in the House of Representatives. America’s Beneficial Semiconductor Incentives Act or the CHIPS Act, which is incorporated into broader competition law, includes $ 52 billion in domestic semiconductor manufacturing and incentives to invest in new semiconductor manufacturing plants in the United States, as well as the creation of a National Center semiconductor technology. …

“We need the House of Representatives to pass the Chips Act immediately so that we can tackle this case,” Raimondo said.

The chip shortage has caused problems throughout the global auto industry, but Detroit’s automakers have been hit harder than others. The deficit is expected to reduce auto industry revenues by $ 210 billion this year, according to consulting firm AlixPartners.

Automakers such as Ford Motor and General Motors have announced plans to work more closely, even partnerships, with semiconductor suppliers in an attempt to avoid such shortages in the future.

While many believe that the biggest problem of semiconductor shortages lies with the auto industry, the Biden administration has pushed for increased U.S. production of critical components, such as chips, for the U.S. auto industry and other sectors.

Raimondo said increasing domestic chip production is critical as the auto industry begins to produce more electric vehicles.

The Biden administration is pushing for electric vehicles to account for half of US new car sales by 2030. Raimondo called it “a great goal,” but said that “the truth is that it takes a lot of chips.”

The average electric car contains about 2,000 chips, she said, roughly double the average number of chips in a non-electric car.

Overall, Raimondo used the event to call for the passage of the semiconductor law as well as to advertise Biden’s recovery efficiency bill, which is pending a Senate decision.

Raimondo said she remains optimistic about the US economy and US manufacturing.

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