By Jaydeep Saha, Contributing Writer, HCL Technologies Ltd. 

 

More than 100 signatures have been received on a letter to Congress, urging the US House of Representatives and Senate to pass legislation aimed at boosting US economic competitiveness against China, including in chip manufacturing.

The letter, which was organized by the Semiconductor Industry Association (SIA), had signatures from chief executives of Google, Amazon, and Microsoft on Wednesday.

“The competitiveness legislation pending in Congress is critical to the US economy, national security, and supply chain resilience. The bill includes important measures to invest in research and technology leadership, workforce development, and domestic manufacturing and strengthened supply chains, including investments in key areas such as semiconductors vital to our entire economy. The rest of the world is not waiting for the US to act. Our global competitors are investing in their industry, their workers, and their economies, and it is imperative that Congress act to enhance US competitiveness,” said the letter.

The SIA said the letter was the largest group of corporate leaders so far to endorse the bill.

Reuters reported that the legislation includes $52 billion in federal funding to expand US semiconductor manufacturing capacity, which happens in factories called ‘fabs’ (or fabrication plants).

“The leaders of our industry are under pressure to get fabs up to respond to the growing demand for chips. And they can't wait,” SIA CEO John Neuffer, told Reuters, adding that the bill would “ensure that more of those fabs are going to be built in the US rather than overseas.”

The SIA is also calling for an investment tax credit for semiconductor manufacturing and design in the competitiveness legislation, reported Reuters.

A bipartisan win

Named the US Innovation and Competition Act, the legislation was the product of multiple Senate committees, and touches on a broad range of issues. CNN reported that if the bill does become law, it would be a major bipartisan win for President Biden who has made reaching across the aisle a priority. He’s faced criticism for moving unilaterally on the massive Covid relief package he signed in March, which didn't receive any Republican votes, and is in deep negotiations with Senate Republicans over his massive infrastructure spending plans.

CNN reported that the American business community has long accused China of engaging with “unfair trade practices”, like “intellectual property theft” and “forced technology transfers”. The legislation directs the President to use the full range of his authority to impose sanctions against people or entities that have “stolen US trade secrets”, as well as sanctions against foreign entities or people that have supported or engaged in cyberattacks or otherwise undermined US cybersecurity on China’s behalf. It would create an inter-agency task force to address Chinese market manipulation in the United States and authorize spending to support an independent media in China.

The legislation in practice

  • Investment in semiconductor manufacturing: The bill would provide more than $50 billion over five years to subsidize semiconductor manufacturing, a move aimed at competing with China and addressing the global chip shortage that's disrupting supply chains for cars, smartphones, and appliances.

  • Create regional technology hubs: The bill would provide $10 billion over five years to the department of commerce to create regional tech hub programs. A third of the hubs would have to be located in rural areas.

  • Spur 5G innovation: The bill would provide $1.5 billion to help spur innovation in advanced wireless technologies.

  • Counter China’s state-directed economic policies: The bill directs the US Secretary of State to publish a list of all state-owned enterprises in China that have used either of those tactics. It also takes steps to strengthen America's partnership with allies in the region, like Japan and Australia, to stop importation of goods made with stolen intellectual property.

  • Boost National Science Foundation, and R&D: The legislation would create a new directorate of technology and innovation within the National Science Foundation, a government agency that supports research and education. About $81 billion would be allocated to the National Science Foundation, including $29 billion over five years for the new directorate, which would establish 10 focus areas, including artificial intelligence, robotics, and biotechnology. Another $10 billion would go to university technology centers and innovation institutes to conduct research on the key focus areas. The Energy Department would get nearly $17 billion for research and development for energy-related supply chain activities.

  • Buy American requirements: The legislation would require that the iron, steel, manufactured products, and construction materials used in federally funded infrastructure projects is produced in the United States. Currently, some federal projects don't require the materials to be America-made. The bill would also codify the Made in America office that Biden created earlier this year by executive order.

  • Support space exploration: The legislation would provide some additional funding for NASA, in part to carry out its human landing system program that aims to transport Americans to the moon. It would also extend authorization for the International Space Station through 2030 and direct NASA to come up with a plan to develop space suits ready for deep space exploration.

Democratic House Majority Leader Steny Hoyer said he hoped lawmakers could complete the legislation by the end of the month.

However, the bill has yet to come up for a vote in the House, and after the summer recess, most observers expect lawmakers to shift their attention to this fall’s midterm elections.

CNN reported that President Biden has expressed support for the bill, which would invest more than $200 billion into American manufacturing, technology, research, and development.