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US faces security 'crisis' on chips, commerce secretary says

Jack Fitzpatrick, Bloomberg News on

Published in News & Features

The U.S. faces a national security “crisis” due to its lack of semiconductor production, Commerce Secretary Gina Raimondo told senators in a hearing on President Joe Biden’s infrastructure plan.

“It is not an exaggeration to say at the moment that we have a crisis in our supply chain,” Raimondo said Tuesday, calling the production deficiencies “a national security risk and an economic security risk.”

The U.S. is entirely reliant on China and Taiwan for semiconductors, Raimondo told members of the Senate Appropriations Committee.

Biden’s $2.25 trillion infrastructure proposal called for $50 billion for the National Science Foundation to create a technology directorate that would focus on semiconductor manufacturing, among other things.

The global semiconductor shortage has hit industries from automakers to consumer electronics, and Taiwan’s largest company, Taiwan Semiconductor Manufacturing Co., warned last week that it may extend into next year.

 

The U.S. still leads the world in chip design, but manufacturing has largely been ceded to foreign firms. The U.S. share of semiconductor manufacturing has dropped to 12%, according to a September 2020 report by the Semiconductor Industry Association and the Boston Consulting Group, compared to 37% in 1990.

Addressing the supply chain issues affecting chip manufacturing has bipartisan support in Congress. Senate Majority Leader Chuck Schumer, a Democrats, and Republican Todd Young of Indiana plan to introduce legislation, called the Endless Frontier Act, on Tuesday that would provide $100 billion over five years to boost research and development in the U.S.

Measures in the infrastructure bill won’t simply be a subsidy to profitable companies, and will instead require them “to have skin in the game,” Raimondo said.

Senate Appropriations Vice Chairman Richard Shelby, an Alabama Republican, said he is skeptical about “massive subsidies” to compete with China on semiconductor production at the expense of taxpayers.

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