U.S. commerce secretary urges boost in semiconductor output

Keywords Economy / Technology

U. S. Commerce Secretary Gina Raimondo on Monday will make the case for more domestic production of semiconductors in a pitch aimed at the administration’s goal to have 50% of U.S. vehicles be electric by the end of the decade.

Raimondo will press Congress to pass legislation that would put about $52 billion toward U.S. chip manufacturing in a speech to the Economic Club of Detroit during a visit to the city that’s the capital of American auto manufacturing. Earlier Monday, she participated in a roundtable discussion on semiconductors with Michigan Sens. Debbie Stabenow and Gary Peters and Reps. Debbie Dingell, Dan Kildee and Rashida Tlaib, among others.

United Autoworkers President Ray Curry and auto industry representatives also attended.

The Michigan Democrats have all strongly pushed the Biden administration to come up with solutions for the semiconductor shortage and have asked for a share of the supply to be set aside specifically for auto production, which has been hurt by the crisis. The state is one of the most important political battlegrounds in the country, and its Democratic governor, Gretchen Whitmer, is up for re-election in 2022.

“The goal is, we want to make chips in America that we consume,” Raimondo told reporters at a United Auto Workers hall south of Detroit on Monday. “We only produce 12% of global supply and the majority are built in Taiwan. We want to make chips of all kinds.”

The worldwide auto industry has been suffering production disruptions for nearly a year from a global chip shortage, leading to furloughs for American autoworkers. The administration has acknowledged there’s no quick fix.

Raimondo said money from the pending legislation, called the Chips Act, would provide incentives for manufacturers to build at least a dozen semiconductor facilities in the U.S. She said there would be strings attached to the incentive money, but did not elaborate.

Dingell said that the goal is to get the bill approved in the House and on President Joe Biden’s desk before Christmas so the Commerce Department can start allocating the money as soon as possible.

Raimondo is leading the Biden administration’s response to the shortage. Her department recently asked companies in the semiconductor supply chains for information to detect bottlenecks and potential hoarding of supplies.

The submissions of more than 150 companies from around the world exceeded Raimondo’s expectations, she said. Her team is still evaluating the responses and plans to share a high-level summary of the findings in coming weeks.

The Biden administration is working with allies to develop new capacity to ensure early detection of supply-chain disruptions and prevent future shortages.

None of the legislation can resolve the near-term shortage because it takes at least a year and a half for a new plant, said Kildee, a Democrat.

“It’s tough,” he said. “Everything is at least 18 months out.”

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