Home/ News / World/  Biden calls for $50 billion to boost US chip industry

President Biden’s expansive infrastructure proposal includes $50 billion for the American semiconductor industry, whose lobbying efforts have gained momentum amid a global chip shortage and fears that China might be overtaking the U.S. in a critical technology.

Mr. Biden’s plan, released Wednesday, seeks to leverage bipartisan support on Capitol Hill to subsidize domestic manufacturing and chip research. The $50 billion will go toward production incentives and research and design, including the creation of a National Semiconductor Technology Center, administration officials said.

The president detailed the overall $2 trillion infrastructure plan during a late-afternoon speech in Pittsburgh. It would be paid for by raising the corporate tax rate to 28% from 21% and increasing taxes on companies’ foreign earnings.

Mr. Biden has broad bipartisan support for aiding the semiconductor industry, including from Republican lawmakers who say China is spending heavily to build its own chip-making capacity, threatening the U.S. lead in advanced chip technology.

Some conservatives, however, say the industry shouldn’t be federally subsidized.

“The American semiconductor industry is currently strong and Congress shouldn’t be sending tens of billions of dollars to a profitable tech industry," said Jessica Anderson, executive director of Heritage Action, an advocacy group.

Cesar Ybarra, senior director of legislative affairs of FreedomWorks, another conservative group, said U.S. leadership in semiconductors “is a laudable goal that should be funded by private enterprise and not the American taxpayer."

The president had already called for propping up domestic production and a broad supply-chain review as chips have become scarce, hurting the U.S. auto industry and other sectors.

Cars use chips for numerous systems, including engine management, automatic braking and assisted driving. Chips also underpin a sizable cross section of the economy, powering everything from videogames and laptop computers to data centers, products that have become central to remote work and distance learning.

Stronger domestic manufacturing of semiconductors could also fortify U.S. strategic interests. The Department of Defense has said that a dependence on foreign manufacturing poses risks, because much of the nation’s critical infrastructure relies on microelectronic devices.

The threats become more pronounced as emerging technologies such as artificial intelligence require more advanced components.

“Spending on the semiconductor industry and digital and physical infrastructure must be closely linked if America is to remain competitive and prosperous," Intel Corp.’s vice president of U.S. government relations, Al Thompson, said in a written statement.

Supporters say the initiative could help the U.S. regain some of the ground it has lost to other countries, such as Japan, South Korea, Taiwan and China, in semiconductor manufacturing.

The Semiconductor Industry Association said the U.S. share of global semiconductor manufacturing has fallen to 12% today from 37% in 1990, primarily because of government subsidies to global competitors that make it harder to attract new construction.

Chip companies have also been building plants outside of the U.S., because of a growing network of suppliers overseas and an expanded workforce of skilled engineers needed to operate expensive manufacturing machinery.

“Semiconductors are foundational to America’s economy and job creation, national security, and critical infrastructure," SIA President John Neuffer said in a written statement Wednesday that supported Mr. Biden’s initiative.

Chip manufacturing has become a growing focus among lawmakers on Capitol Hill, who are more attuned to the competition with China across an array of sectors. The 2021 defense bill included the bipartisan Chips Act, calling for federal incentives for semiconductor manufacturing and increased investments in research. But it didn’t include funding.

“Working with Congress, your administration now has an historic opportunity to fund these initiatives to make them a reality," industry executives wrote in a February letter to Mr. Biden. The incentives would fund construction of plants, which typically cost more than $10 billion, or expand existing ones.

The White House cited the Chips Act on Wednesday in promoting Mr. Biden’s $2 trillion infrastructure proposal. As with that legislation, Mr. Biden isn’t including an investment tax credit the industry has sought.

Some U.S. manufacturers are already moving ahead with increasing domestic manufacturing.

Intel’s new chief executive, Pat Gelsinger, recently laid out a broad plan to revive the U.S. chip-making company, including a roughly $20 billion investment commitment into two new Arizona plants and efforts to further expand in-house manufacturing. Production at the two Arizona facilities is supposed to start in 2024.

Mr. Gelsinger also said the company was bidding on a Pentagon contract to build a commercial chip-production factory, to help address U.S. government security needs.

The Intel investment is part of a widespread increase in spending by the semiconductor industry to meet global demand. Market-research firm IC Insights projects that the industry is on pace to spend at least $129.4 billion on new plants, equipment and more this year, up about 14% from a year earlier.

This story has been published from a wire agency feed without modifications to the text.

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