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US tech firms call on Biden to invest billions in domestic chip manufacturing


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US tech firms call on Biden to invest billions in domestic chip manufacturing

Biden administration officials are meeting April 12 with nearly two dozen business executives to discuss the need for billions of dollars in investment to support domestic chip manufacturing, which is falling behind similar efforts in Asia.

At a similar event hosted April 8 by the U.S. Commerce Department's Bureau of Industry and Security Office of Technology Evaluation, executives from Intel Corp., Dell Technologies Inc. and other semiconductor industry stakeholders stressed the need to quickly pass the bipartisan Chips Act, which would allocate $50 billion to fund domestic chip manufacturing capacity. President Joe Biden included the Chips Act in his recently unveiled infrastructure plan.

Technology executives say a failure to create a more robust chip supply chain would put the U.S. at risk of falling behind countries like China, which is investing billions in chip production. A shortage of the critical computing components has already affected U.S. automakers including General Motors Co. and tech firms such as Apple Inc., which delayed the production of some MacBook and iPad products due to chip sourcing issues. Automakers were among the executives speaking to White House officials April 12 about the chip production issue.

"Intel sees America at a critical inflection point," said Tom Quillin, a senior director at Intel, a California-based technology firm that produces semiconductors, at the April 8 Commerce Department forum. "How the U.S. government invests in the semiconductor industry likely will determine the future of domestic technology innovation and U.S. global leadership."

SNL Image

An Intel Corp. fabrication facility in Arizona. Intel officials want the Biden administration to spend billions on chip manufacturing in the U.S.

Source: Intel Corp.

Semiconductors, while expensive and complex to manufacture, are the building blocks that power everything from smartphones and cars to utility grids and weapons systems. They are also needed for increased connectivity in small-town and rural areas of the country that have been hard-hit by the pandemic.

But the U.S. has underinvested in these critical components, due largely to a 25% to 40% production cost disadvantage that U.S.-based manufacturers experience compared to heavily subsidized competitors in Asia, Quillin said. U.S. chip production will decline to a "point of irrelevance" if Washington, D.C., does not start investing in new production facilities, he said.

The U.S.-based share of global chip production was 12% as of 2020, a decline from 37% in 1990, said Michael Hogan, senior vice president and general manager of the automotive, industrial and multi-market strategic business unit at GlobalFoundries, a semiconductor company with U.S. locations in California, Texas and New York. "Economic progress, national security, and our health and safety hang in the balance," he told Commerce Department officials on April 8.

Demand for chips is at an all-time high in the IT manufacturing industry, especially due to increased demand for remote learning, working and healthcare during the pandemic, said Eva Hampl, director for international government affairs with Dell Technologies, at the same event.

The impact on education continues as many schools remain partly or completely closed, requiring students to take classes online. "We continue to work hard to help bridge the digital divide," Hampl said. "The reality of the American economy is that not everyone has the necessary tools to be able to effectively work or learn from home at this point, despite the nation enduring the second year of the pandemic."