Dithering Congress hindering US chip competitiveness

In 1990, the United States manufactured 37% of the world’s semiconductor computer chips. In the last three decades, U.S. market share of the integrated circuits it invented has dropped to about 11% of global capacity.

We’re falling behind in a market essential in the making of vehicles, computers, smartphones, appliances, medical equipment, military weapons, satellites and virtually every other type of modern electronic device.

Meanwhile, federal legislation to boost U.S. chip production remains needlessly stalled, holding us back as a nation and hindering economic development in New Mexico.

The U.S. CHIPS Act would provide more than $52 billion in subsidies for companies that build semiconductor plants in the United States. The bill would establish investments and incentives to support U.S. semiconductor manufacturing, research and development, and supply chain security and resiliency. It would also match state and local government incentives to private entities to build fabrication facilities to manufacture advanced computer chips.

“What Congress is trying to do is fill in the R&D gaps and making sure that innovation is brought to the market from lab to fab, so to speak,” Intel Corp. executive Greg Slater told the Journal Editorial Board recently.

Action from Congress is critical to generating more Intel investment in the United States, including at Intel’s Rio Rancho chip-manufacturing plant, where the company is investing $3.5 billion to produce new types of semiconductor technology. The multibillion dollar upgrade will produce 700 new high-paying jobs and create the first U.S. advanced packaging facility. It’s the largest single Intel investment in Rio Rancho since the semiconductor giant began operating here in 1980.

“And that can open up all kinds of future possibilities,” Slater said. “Anytime you bring in a new operation at a site, you often get spin-off benefits.”

Intel’s New Mexico expansion is part of an aggressive strategy by the world’s largest chip maker to “re-shore” domestic chip production and decrease dependence on East Asian counties, where most chips are now made. Intel’s ambitious goal is to build up its U.S. manufacturing volume to 30% of global market share by the end of the decade, and as a state and country we need to support that.

The CHIPS Act has strong bipartisan support. Democrats and Republicans agree on the need for federal research money to compete with China, but politics has resulted in endless delays since the Senate approved the CHIPS Act by a wide margin in June 2021.

The House then delayed action for eight months as members larded up the bill with pet projects, similar to what happens with must-pass defense authorization bills.

The House finally passed its own version in February, but it was very different from the Senate version. A 107-member bicameral conference committee was appointed in April to reconcile the two bills but didn’t start meeting until May.

“Pass the damn bill and send it to me,” President Biden said during a May visit to Ohio, where Intel had said it would expand a planned $20 billion fabricating plant to $100 billion if it could get congressional support. The bottom line is U.S. manufacturers are struggling to compete and maintain an edge against China in the next generation of microelectronics. “The U.S. Chips Act makes it possible to do things that were not cost-effective before,” Slater explained.

Yet here we are at an unnecessary impasse, with Congress running out of time before the August recess. Meanwhile, other countries like China, India and the European Union are stepping up investments in chipmaking.

We know our state’s congressional delegation understands the importance of high tech to New Mexico and the United States. It’s time for them to unite and speak up about the urgent need for Congress to cut all the extraneous “gimmee” legislation and funding and pass a clean CHIPS Act bill ASAP — before we lose our competitiveness in a hightech industry sure to be a growing part of the world’s and state’s 21st Century economy.