US semiconductor, steel sectors laud passage of COMPETES Act

Industry groups representing the US steel and semiconductor industries praised the passage of the America COMPETES Act by the House of Representatives Feb. 4 due to the support it provides for fair international trade and domestic semiconductor manufacturing.

American Iron and Steel Institute CEO Kevin Dempsey said the bill would strengthen US trade tools to provide relief more quickly against repeat trade offenders, target cross-border industrial subsidization and expedite the completion of anticircumvention inquiries.

"As China and other export-oriented economies develop new ways to evade and circumvent US trade remedy orders, it is critical that our trade laws be updated to respond to these challenges," Dempsey said in a statement. "We are pleased that the House today has taken the first step toward adopting these important strengthening amendments to our trade laws."

Dempsey said the tools in the bill would provide "a level playing field against foreign competitors that seek to cheat the system."

Meanwhile, the Semiconductor Industry Association provided similar optimism in response to the passage of the legislation, noting the $52 billion in funding that it provides to grow the US' semiconductor production and research capacity.

"House passage of CHIPS Act investments is a significant step toward strengthening America's leadership in semiconductors, which are foundational to our economy, national security, and global leadership in the transformative technologies of now and the future," SIA CEO John Neuffer said in a separate statement.

The COMPETES Act will fund semiconductor manufacturing through the previously passed CHIPS Act.

The global share of modern semiconductor manufacturing capacity in the US has fallen to 12% from 37% in 1990 as foreign governments have subsidized their industries and domestic support has lagged, according to the SIA.

SIA said it is also advocating for a separate semiconductor investment tax credit to incentivize US semiconductor manufacturing and design.

The House's passage of the COMPETES Act represents a follow-up to the Senate's approval of the US Innovation and Competition Act in 2021, which includes similar trade and investment provisions. Both legislative bodies will now discuss differences in the two bills over the coming weeks before sending a final package to President Joe Biden for signature.

White House welcomes passage

Biden said the passage of the COMPETES Act brings the nation a step closer to achieving stronger supply chains, lower prices and better manufacturing jobs.

"Business and labor alike have praised this legislation as vital for continuing the economic momentum we've seen over the last year, and national security leaders from both parties have said that the investments in this bill are needed if we want to maintain our competitive edge globally," he said in a statement. "I look forward to the House and Senate quickly coming together to find a path forward and putting a bill on my desk as soon as possible for my signature. America can't afford to wait."

US Commerce Secretary Gina Raimondo said the dual legislations passed by the House and Senate ensure that the US can invest in manufacturing and technology that is "crucial to our national and economic security."

"Now that separate versions of the bill have passed both the House and the Senate, I'm urging Congress to move quickly to begin negotiations and work out the differences between the bills, focus on areas of common agreement, and get a final version to President Biden's desk for his signature," she said in a statement.

Automakers see chip shortage easing in 2022

The House's passage of the COMPETES Act follows a year in which global automobile manufacturers implemented several production outages due to the inability to source semiconductor chips and other necessary raw materials.

During their fourth-quarter earnings calls, US-based automakers said they projected semiconductor supply issues to ease in 2022 as the companies adapted to new supply chain dynamics, though uncertainties related to the coronavirus pandemic still posed a risk.

"By the time we get to third and fourth quarter, we're going to be really starting to see the semiconductor constraints diminish," General Motors CEO Mary Barra said Feb. 1. "That's what we're working to achieve across all of our platforms and across the globe with all of our suppliers, but that's our best current outlook."

However, Ford CFO John Lawler said Feb. 3 the company expects "supply constraints to remain fluid throughout the year, reflecting a variety of factors, including semiconductors and COVID."

While it awaits support from the federal government, Ford CEO James Farley said the company was continuing to work with semiconductor manufacturer GlobalFoundries to update the design, usage, and sourcing of chips for its vehicles.

"We can partner with the government depending on the CHIPS Act to capitalize here, but it will be a few years until we benefit from that," he said. "But it's a really big thing to descale ourselves on the feature-rich chips from the current ecosystem that we depend on around the world."