President Joe Biden on Friday urged Congress to pass legislation strengthening research and development and manufacturing for supply chains to address global semiconductor shortages.
Semiconductor shortages have been a persistent thorn in the Biden administration’s side. The shortage of the chips – which are essential for the production of smart phones, medical equipment, cars and a number of household appliances – has hamstrung the administration’s economic recovery effort from the Covid-19 pandemic and contributed most notably to an increase in automobile prices, which account for one-third of the annual price increases in the core consumer price index.
“Let’s get another historic piece of bipartisan legislation done,” Biden said in remarks at the White House. “Let’s do it for the sake of our economic competitiveness and our national security. Let’s do it for the cities and towns all across America working to get their piece of the global economic package.”
Intel announced on Friday it is building a new $20 billion chip manufacturing complex outside of Columbus, Ohio, and the President praised the new factory as a “historic investment.”
The President said the new factory would create 7,000 construction jobs and another 3,000 permanent jobs. The Intel announcement is the latest in a series of efforts to expand domestic semiconductor manufacturing.
“To be able to say, made in Ohio, made in America – what we used to always be able to say 25, 30 years ago – that’s what this is about,” Biden said.
The President said: “We’re investing in American workers. We’re going to stamp everything we can ‘Made in America,’ especially these computer chips.”
Biden lamented the decline in American manufacturing of semiconductors and how many companies have moved their operations and jobs overseas in recent decades. Biden said the US now invests less than 1% of its gross domestic product (GDP) in research and development, and stressed China was outpacing the US in this area.
“Folks at home might be wondering why it’s such a big deal for manufacturing something so small, the size of a postage stamp. Why is that so important? Well, semiconductors are small computer chips that power virtually everything in our lives – your phone, your car, your refrigerator, your washing machine, hospital equipment, the internet, the electric grid and so much more,” Biden said.
Biden added: “At the end of the day, this is about national security, economic security and it’s about jobs.”
The President said the Covid-19 pandemic has exacerbated the manufacturing issues and led to low supply and delays in deliveries of things like cars and dishwashers.
“Because supply is low, we find ourselves in a position that we’re really behind the curve. Prices are going up,” Biden said.
Estimates from consulting firm AlixPartners put the cost of the global chip shortage at $210 billion in lost sales for the auto industry alone.
According to a fact sheet shared with CNN, the White House has been working with Congress, international partners and the private sector “to expand U.S. chip manufacturing capacity.”
Commerce Secretary Gina Raimondo applauded Intel’s announcement, calling it “a big win for Intel, for American manufacturing, and for American consumers who can look forward to lower prices as we bring home production of semiconductors that keep our economy running,” in a statement on Friday.
According to an estimate from the Semiconductor Industry Association, the industry has announced nearly $80 billion in new investments in the US through 2025 since the beginning of 2021, including a $17 billion Samsung factory in Texas, $30 billion in investments from Texas Instruments and more.
The President raised the issue of global semiconductor shortages during an October summit on the margins of the G20 summit in Rome. During the meeting, Biden said that the way to solve the supply bottlenecks would be ending the Covid-19 pandemic, arguing that it’s “the ultimate key to unlocking the disruptions.”
The Department of Defense has also used Defense Production Act authorities to strengthen supply chains for key defense-related semiconductors.
This story has been updated with further developments on Friday.