Sunday, August 14, 2022

Senate Okays $52 Billion for Domestic Semiconductor Production

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No small potatoes: $52 billion for the manufacture of chips, and $200 billion for scientific research. But there’s lots more to do.

Capping a years-long effort, the U.S. Senate passed legislation on Wednesday that will invest a cool $52 billion into the domestic semiconductor industry, as well as $200 billion to fund scientific research into robotics, quantum computing and other technologies.

That’s a good idea and investing in semiconductors is a very good thing. Having more of their production in the United States will relieve serious production bottlenecks for all kinds of products, from consumer electronics to new cars. And, what’s more, making them in America will mean good jobs associated with their manufacture – not only in the chip fabrication factories that will be established but in all the supporting businesses that will arise to support those factories. Think of the auto parts makers that supply the domestic auto industry.

What’s more, this legislation moving forward – the House is expected to pass it next week – marks a significant change in the way the federal government looks at industrial policy. For decades Washington encouraged manufacturing for all kinds of industries to offshore, and that meant the human capital and technological know-how for lots of advanced manufacturing techniques offshored too. And all it took was a couple of years of deteriorating relations with the Chinese government, a pandemic that continues to strain global supply chains, and a disruptive land war in Europe to help convince enough American lawmakers that it’s time to entice critical manufacturing sectors to return to the United States.

That means sectors like semiconductors. And so, yes, it’s very encouraging to see the Senate move this investment forward. But – and this is something Alliance for American Manufacturing President Scott Paul said in a statement after today’s vote – this must be the first step and not the last word.

This bill that passed the Senate is significantly slimmed down from what was proposed earlier this year when the House of Representatives revealed its own version of the legislation. Some articles will note that today’s bill includes none of the House bill’s provisions on marijuana and immigration policy, but it also includes none of the House’s attempts to improve trade enforcement policy to counter economic rivals like China.

There’s no update to the de minimis rule that allows importers like Amazon to avoid billions of dollars in duties and other customs fees. There’s no establishment of an outbound investment review process that would examine the sale and offshoring of production capacity in critical sectors to foreign adversaries. There’s no update to antidumping and countervailing duty laws to keep up with evolving unfair trade tactics used by importers in sectors like steel and aluminum. And there’s no reauthorization of Trade Adjustment Assistance for workers who have lost their jobs to trade disruptions. Congress shamefully let the 50 year old program lapse a few weeks ago.

Anyway, good on the Senate for passing this important legislation. We’ll be watching for the House vote that’s expected shortly. But don’t forget: There’s much more to be done.

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Christine
Christine has always been fascinated by the industrial world. She comes from a family of industrialists and has always been surrounded by machines and factories. When she was younger, Christine would often sneak into her father's office to watch him work on his designs. She loved the way he could take something and make it better. Now Christine is following in her father's footsteps, working at an industrial company that builds machines for factories all over the world. She loves her job and finds satisfaction in being able to improve production lines and help companies become more efficient.
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