US Commerce urges Congress to pass semiconductor funding act

The US Commerce Department urged Congress Jan. 25 to pass the US Innovation and Competition Act, which includes $52 billion in funding for the domestic semiconductor industry, following results released from a report indicating a critical shortage of computer chips.

"The semiconductor supply chain remains fragile, and it is essential that Congress pass chips funding as soon as possible," Commerce Secretary Gina Raimondo said in a statement. "With sky-rocketing demand and full utilization of existing manufacturing facilities, it's clear the only solution to solve this crisis in the long-term is to rebuild our domestic manufacturing capabilities."

Commerce commissioned the report in September 2021 to gather information and investigate the risks in the US' semiconductor supply chain. Results from the report indicate that the median inventory held by domestic semiconductor chip consumers, such as automakers and medical device manufacturers, has fallen to less than five days in 2021 from 40 days in 2019.

"If a COVID outbreak, a natural disaster, or political instability disrupts a foreign semiconductor facility for even just a few weeks, it has the potential to shut down a manufacturing facility in the US, putting American workers and their families at risk," Commerce said.

Most semiconductor manufacturing facilities are operating at or above 90 percent utilization, the report said. As such, there is limited additional supply to bring online, even though chip demand in 2021 rose 17% compared with 2019, it added.

"President Biden has proposed $52 billion to revitalize our domestic semiconductor industry, and every day we wait on this funding is a day we fall further behind," Raimondo said.

Intel said Jan. 21 it will invest more than $20 billion to construct two semiconductor chip factories near Columbus, Ohio, with production expected to start in 2025.

However, the Ohio site will be prepared to potentially accommodate up to eight chip factories with a final investment total of $100 billion over the next decade pending government funding, Intel said.