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Biden administration warns of major national security ramifications as bill to increase U.S. chip production

The Biden administration and congressional Democrats are warning of serious economic and national security consequences if Congress doesn’t pass a bill by the end of July to spur semiconductor manufacturing in the United States.

Their calls are growing stronger as Senate Republicans led by Mitch McConnell threaten to block computer chip legislation, creating a standoff that threatens to derail one of the biggest bipartisan initiatives in Congress. Republicans have attributed their cooperation to Democrats not pushing a separate package of energy and economic initiatives that GOP lawmakers warn will raise taxes on small businesses and hurt the economy. This is a demand that Democrats outright reject.

Commerce Minister Gina Raimondo said computer chip makers are getting lucrative offers from other countries such as South Korea, Japan, France, Germany and Singapore to set up factories there. She cited Monday’s announcement by STMicroelectronics and GlobalFoundries about the construction of a semiconductor plant in France as an example that other countries are moving ahead faster than the US.

“The bottom line is that if Congress does not do its job in July, there will be very real, very devastating consequences,” Raimondo told The Associated Press.

These consequences mean not only the loss of jobs for the US, but also an over-reliance on other countries for semiconductors, which can become a critical vulnerability because they are so important for products ranging from automobiles and mobile phones to modern weapons systems.

Raimondo was part of a private briefing with senators on Wednesday to discuss the national security implications of the semiconductor legislation. She was joined by Deputy Secretary of Defense Kathleen Hicks and Director of National Intelligence Avril Haynes. The meeting lasted almost two hours.

Raimondo subsequently told reporters that, based on the questions asked by the senators, “the urgency was clear.” She also said that “the time for talk is over, the time for action is now”.

McConnell did not respond to reporters’ questions after attending the briefing. Sen. Ron Wyden, D-Oregon, said it underlines that Congress needs to act soon.

“The law we are trying to pass is a serious national security issue. This is a serious economic issue and you cannot afford to delay,” Wyden said.

Raimondo and Secretary of Defense Lloyd Austin said in a letter to Congressional leaders that semiconductor companies need to put “concrete in the ground” this fall to meet increased demand. Cabinet members said they estimate that further delays in passing the law “will lead to a semiconductor investment gap that we may not be able to recover.”

Both houses of Congress have passed bills including about $52 billion (roughly Rs. 4,15,400 crores) in financial support for the US semiconductor industry, but they are struggling to consolidate the legislation into a final compromise that could get 60 votes in the Senate. , the number needed to overcome procedural obstacles.

McConnell, Kentucky, suggested on Tuesday that the House of Representatives could work with the version passed by the Senate, allowing it to move to President Joe Biden’s desk to sign the bill. Or the two houses could simply pass a narrower bill focused on semiconductor incentives, excluding provisions on trade and new research priorities.

Both options face significant obstacles. Maryland Rep. Steny Hoyer, House Majority Leader, said McConnell’s call for the House to support the Senate bill was “an arrogant and unreasonable demand.” 4 15,400 crore) in the form of financial incentives after many years of work on other priorities in the bill.

“There are just too many other things that we have been working so hard on. Why would we need to cut it?” Sen. Tim Kaine, D-Va, said. “If it’s about being truly competitive, why should we say we just want to be a little competitive.”

Sen. Charles Grassley, D-Iowa, said he could support the financial stimulus-only bill “but he has problems with other conference members” who are pushing for additional provisions.

The Democrats missed their goal of reaching an agreement on the principles of a final bill by the end of June, so that the staff could draft the text and the two houses could vote in July. Raimondo said she spoke with several Republicans about narrowing the differences between the House and Senate before McConnell tweeted about a bill known by its acronym USICA for the U.S. Innovation and Competition Act: USICA as long as Democrats pass partisan bill about reconciliation.

“Obviously a tweet by Senator McConnell a couple of Friday days ago slowed things down,” Raimondo said.

However, she said she was considering a bill at the “5-yard line” and that negotiators could complete it within a week to 10 days if both sides cooperated. She said that if legislators fail to complete the bill, “it’s not the Republicans who will win. China wins if this is not accepted.”

Raimondo is trying to appeal to lawmakers’ concerns about how much the US is dependent on other countries, namely Taiwan, to produce advanced computer chips.

“Look, I mean, I know a lot of these Republicans. They are patriots. They want to do the right thing for America. They are afraid that we are so dependent on Taiwan for exactly the kind of chips our military depends on,” Raimondo said.

Senator Tom Tillis, a member of the US Congress, was one of the Republicans who voted for the Senate version of the semiconductor law. Before he decides on a final compromise bill, he wants to see the price of a separate energy and economic package the Democrats are putting through a process called reconciliation that would allow them to pass the bill without any Republican backing.

Tillis also doesn’t believe the warning that lawmakers need to pass a semiconductor bill this month or it might not happen at all.

“This is not the only vehicle that chips can drive before the end of the year,” Tillis said.

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