Biden looks to Intel investment in the US to advance his China agenda

WASHINGTON – Anniversary Intel’s $20 Billion Investment In a new semiconductor plant in Ohio, President Biden on Friday sought to kick-start a stalled element of his economic and national security agenda: a massive federal investment state into the production, research and development of technologies that China also seeks to dominate.

With two other major legislative priorities being supported by Congress – the Better Rebuilding Act and the voting protection legislation – Mr. Biden turned to the press for another bill and one with backing. significantly bipartisan.

But he has lost seven important months since the Senate passed the measure, a vast Chinese competition bill that would spend nearly a quarter of a trillion dollars on domestic chip production, artificial intelligence research, robotics, quantum computing and a host of other technologies. Invoice amount most extensive industrial policy law in US history.

Speaking at the White House, Mr. Biden said the US was in a “severe economic and technological competition” with China. He chose the words deliberately, knowing that although it sounded obvious to Americans, Chinese officials in recent months had objected to the use of the word “competition,” claiming that it had a Chinese undertone. a contest like the Cold War.

“We’re going to ask everyone, including China, to play by the same rules,” Biden continued. “We will invest whatever is needed in America, in American innovation, in American communities, in American workers.”

He thinks the initiative will be a long-term solution to supply chain disruptions and rising inflation and will free American weapons systems from dependence on foreign parts.

After months in which he rarely mentioned the China competition bill so as not to lose focus on other elements of his agenda, Biden on Friday said it was necessary to pass the bill “because benefits of our economic competitiveness and national security.”

Today, we produce only 10% of computer chips, despite being a leader in chip design and research, he said. “Right now we don’t have the capacity to make the most advanced chips.”

By some estimates, the increasingly widespread shortage of chips, which are needed to power everything from cars and washing machines to medical equipment and the power grid, have forced some factories to shut down their wires. production line and completely knocked out US growth last year.

Although the Biden administration has counted Intel’s new investment near Columbus, Ohio, as a partial remedy for supply chain disruptions that have led to global chip shortages and fueled inflation, the project will does nothing to solve any short-term economic problems. The Ohio plant, an early stage that Intel says could be an investment of up to $100 billion, is expected to start operating through 2025, and many analysts have forecast chip shortages will start to decline by the end of this year.

But beyond providing positive headlines for a besieged White House, Intel’s plans could help build momentum for a key element of Mr Biden’s agenda that has been pushed aside. as lawmakers face ambitious bills on infrastructure, social spending and voting rights. Speaker Nancy Pelosi said on Thursday that House committees would soon move to negotiations with the Senate to move China’s competition law to a vote.

When the bill passed the Senate by a wide margin in June, it was sold partly as a jobs plan and partly as a move to avoid leaving America dangerously dependent on a geopolitical rival. his biggest.

China is not yet a major producer of the world’s most advanced chips, and it does not have the capacity to manufacture semiconductors with the tiniest circuits – partly because the United States and its allies have banned them. purchase the lithographic equipment needed to manufacture those chips. .

But Beijing is pumping massive amounts of government funding to develop the sector, and it is also flexing its military scope on Taiwan, one of the largest manufacturers of advanced chips. China accounts for 9% of global chip sales in 2020, second only to the global market share of Japan and the European Union, according to the Semiconductor Industry Association. This is only up from 3.8% of global chip sales five years ago.

At this week’s World Economic Forum, Ursula von der Leyen, President of the European Commission, announced the plan Europe will propose its own legislation early next month to promote the development of the semiconductor industry and predict shortages.

John Neuffer, executive director of the Semiconductor Industry Association, said Japan, South Korea, India and other countries are also introducing their own incentives in an effort to attract an industry. strategically important.

“The clock is ticking,” Mr. Neuffer said. “None of us are working in a vacuum. This is a global industry.”

Mr. Biden’s push to enact the China competition bill comes amid growing frustration in the business world about his economic policies towards the country. Executives have complained that the authorities is not clear yet whether it will lift any tariffs President Donald Trump has placed on China or how it will press Beijing for further trade concessions.

The bill passed by the Senate, known as the US Competition and Innovation Act, includes a series of provisions aimed at boosting the US economy to compete with China, but its focus is 52. billion dollars in federal investment to encourage chip research, design, and manufacturing in the United States.

The chip funding itself has broad bipartisan support and could be passed into law as soon as a few months, advocates say; the question is whether other measures already hidden in the package reduce its prospects. The Senate bill includes a number of trade-related provisions that some House Democrats may oppose, including an investigation into foreign digital trade practices.

The global chip shortage and the terrible inflation that accompanies it has spurred more interest in attracting semiconductor production to the United States. But whether Congress approves billions of dollars in new funding — and how the Biden administration decides to distribute it — seems likely to determine whether an investment like Intel’s is a one-off. is a trend.

Companies including Taiwan Semiconductor Manufacturing Company, Texas Instruments, Micron Technology and SK Group have all announced recent expansion operations in the United States. Samsung promised a $17 billion facility in Texas, while GlobalFoundries has committed a second factory in New York.

But the focus of the global industry remains on East Asia. Although the United States has much advanced research and design in the chip industry, it has gone from being the largest semiconductor producer in the world several decades ago, mainly outsourcing production to Asian factories.

That has proven to be a loophole as pandemic-related closures leave companies around the world short of workers and raw materials, leading to shortages and prices of many goods, especially especially semiconductors skyrocketed. Automakers in particular have been affected, with most of the major automakers forced to cut production last year.

Chip shortages have also become one of the biggest single factors in inflation, which is now a major concern among American voters as they approach the midterm elections. Inflation hit 40-year high in December, driven by a 37% increase in used car prices.

In an effort to ease chip shortages, the Biden administration convened meetings with semiconductor executives, set up a global alert system to identify shortages, and demanded large amount of information from chip companies about potential bottlenecks. The Commerce Department is expected to release some of that information before the end of the month.

Gina Raimondo, Secretary of Commerce, said in a statement Friday that Intel’s investment is a win for the company, for the US manufacturing industry, and for “American consumers who can expect waiting for lower prices as we bring back the semiconductor manufacturing that keeps our economy running.”

But analysts say the administration has little control over any short-term trends in the industry, given the long time it takes to build semiconductor facilities.

Neuffer said his industry welcomes the interest the White House has shown the sector, including encouraging companies to share more information. “But the reality is, only the government can do so much,” he said. “These are very complex, far-reaching global supply chains, and the market will have to work through this.”

Catie Edmondson contribution report. Biden looks to Intel investment in the US to advance his China agenda

Fry Electronics Team

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