The U.S. can’t wait any longer for Congress to pass an innovation competitiveness bill that includes $52 billion to help boost growth of domestic semiconductor production and related capabilities for both economic and national security reasons, a bipartisan panel of stakeholders, politicians and experts said on Monday.
“We need to act obviously because we’re way behind because of our complacency and Chinese economic aggression,” H.R. McMaster, a retired Army three-star general who also spent a year as national security adviser to former President Trump, said during a panel discussion hosted and moderated by Commerce Secretary Gina Raimondo.
McMaster also said Russia’s invasion and war against Ukraine, coupled with China’s support, shows “We are in a competition against revisionist authoritarian powers on the Eurasian land mass and I think it’s been a clarifying moment for the world.”
He added that the Western partnership in support of Ukraine and against Russia in response to the war needs to be translated to similar joint efforts in support of developing advanced domestic semiconductor capabilities among these allies and partners so that China can’t hinder access to computer chips through the imposition of future export controls.
The Senate last June passed its version of the U.S. Innovation and Competition Act (USICA), and the House in February passed a similar bill called the U.S. COMPETES Act, both of which include $50.2 billion to incentivize the production of computer chips in the U.S. and bolster research and development around microelectronics. The bills would also appropriate $2 billion for the Defense Department for research, development and workforce development around microelectronics.
There are differences between the bills, which also get into scientific research and development, foreign and trade policy. The Senate may amend its version of the bill for another vote this week, sending it back the House to reconcile differences. Then House and Senate leaders will appoint conferees from both chambers and parties to iron out differences for a final bill.
Eric Schmidt, the former CEO of Google [GOOG] who also chaired a Defense Department innovation advisory board and co-chaired the National Security Commission on Artificial Intelligence, said that “if done correctly,” the innovation bill will “free up $500 billion” in private sector investment.
However, he lamented that with delays in passage, “every month we are losing that private sector-public sector partnership investment and the one year that this whole process has taken is half of one generation of semiconductor cycles.”
Raimondo highlighted that the federal investment and partnership with industry in semiconductor production will also pay dividends in developing talent.
She also pointed out that the matter is urgent.
“The situation as it relates to semiconductors is quite dire. I will not sugarcoat it,” Raimondo said. “Right now, the median inventory of chips at U.S. facilities has fallen from 40 days just a couple of years ago to less than five days.” She added that 90 percent of the most advanced semiconductors are made in Taiwan and none of these “leading-edge” chips are made in the U.S.
“That is a massive national security vulnerability and it is time to take action,” Raimondo said.
Sen. Todd Young (R-Ind.) said the U.S. has a “national security imperative to ensure that we don’t fall behind China in our technological innovation.” He said the Senate will move forward with USICA this week, which will allow for the House and Senate to begin the conference process toward a final bill.
Young also said there will have to be compromises to get a final bill, adding that a bipartisan bill will demonstrate a united effort by the U.S. “to defend our values and our way of life.” Raimondo said it will also show the “world democracy works.”