Commerce, Defense secretaries warn of consequences without action on semiconductor bill

Two members of the Biden administration are warning of potential consequences if Congress fails to pass legislation aimed at investing in the semiconductor industry in the United States amid a major shortage.  

Commerce Secretary Gina Raimondo and Defense Secretary Lloyd Austin addressed a letter, which was first reported by Punchbowl News, to the four top Democrats and Republicans in the Senate and House, urging them to pass the Creating Helpful Incentives to Produce Semiconductors (CHIPS) in America Act.

“If these funds are not appropriated in the coming weeks, the United States will miss out on the current wave of semiconductor investment. Chip producers must make capital expenditure decisions now to meet the enormous increased demand,” the two said. “If we do not act, they will expand in countries that are already aggressively offering incentives, rather than here in the United States.”

The two also warned that failing to pass the legislation would “entrench our overdependency” on other countries to produce semiconductor chips, which are used in a variety of industries, including the auto industry.

Raimondo and Austin argued that investing in the semiconductor industry would make the U.S. more competitive and bolster national defense.

“Other countries are acting aggressively to provide incentives and secure investments as part of the industry’s current investment cycle. European governments are investing $30-50 billion as part of the European CHIPS Act; India has committed $30 billion to semiconductors and electronics; Japan has committed $7 billion and has already given out incentives; and Korea has implemented initiatives to attract tens of billions of investments by 2030,” the two said.

“Immediate passage will revitalize the domestic semiconductor manufacturing industry and enable game-changing capabilities our war-fighters need,” Austin and Raimondo added.

White House press secretary Karine Jean-Pierre told reporters aboard Air Force One Wednesday that Director of National Intelligence Avril Haines, Raimondo and Deputy Secretary of Defense Kathleen Hicks would brief members of Congress in a classified setting Wednesday on the national security need for the legislation. 

The CHIPS legislation is included in a wider United States Innovation and Competition Act (USICA), but passage of the legislation could be in limbo after Senate Minority Leader Mitch McConnell (R-Ky.) warned that if Democrats proceeded in pursuing a separate reconciliation package, Senate Republicans would forgo their support of the competition legislation.

Morgan Chalfant contributed.