Biden Looks to Intel’s U.S. Investment to Buoy His China Agenda

WASHINGTON – In celebration of Intel’s $ 20 billion investment in a new semiconductor plant in Ohio, President Biden on Friday called for a jump-start to a stalled component of his economic and national security agenda: massive federal investment in manufacturing, research and technology development. That China also wants to dominate.

Along with two other major legislative priorities in Congress – the Build Back Better Act and the Law for the Protection of Voting Rights – Mr. Biden went on to push for a second bill, one with significant bipartisan support.

But the Senate has lost seven crucial months since the move, a huge China competition bill that would dedicate nearly a trillion dollars to a range of local chip manufacturing, artificial intelligence research, robotics, quantum computing and other technologies. The bill is the equivalent of the most elaborate industrial policy law in U.S. history.

Speaking at the White House, Mr. Biden said the United States is in “tough economic and technological competition” with China. He chose these words deliberately, knowing that they sounded clear to American ears, and in recent months Chinese officials have opposed the use of the word “competition” and declared that it echoes the Cold War-like rivalry.

Mr. Biden continued. “We will invest whatever it takes in America, in American innovation, in American communities, in American workers.”

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

Months later, in which he rarely mentioned the China Competition Bill so as not to lose focus on other elements of his agenda, Mr. Biden said Friday that his path was necessary “for the sake of our economic competitiveness and our national security.”

“Today, despite being a leader in chip design and research, we produce barely 10 percent of computer chips,” he said. “We don’t have the capability to make the most advanced chips right now.”

The widespread shortage of chips needed to power everything from cars and washing machines to medical equipment and electrical grids has, according to some estimates, forced some factories to shut down their production lines and knocked out a full percentage of U.S. growth last year.

While the Biden administration has billed Intel’s new investment near Columbus, Ohio, as a partial solution to supply chain disruptions that have fueled global chip shortages and inflation, the project will do little to address any economic problems in the short term. The Ohio plant, which Intel said could be the first phase of an investment of up to $ 100 billion, is not expected to be operational by 2025, and many analysts predict that chip shortages will begin to ease later this year.

But in addition to providing positive headlines for the anxious White House, Intel’s plans Biden’s agenda, which was sidelined as legislators, argues with ambitious bills on infrastructure, social spending and voting rights. Speaker Nancy Pelosi indicated on Thursday that House committees would soon turn to negotiations with the Senate to get China to vote on competition law.

When the bill passed the Senate by a wide margin in June, it was partly sold as a job plan and sold to the United States as a measure to avoid dangerous dependence on its biggest geopolitical rival.

China is not yet a major manufacturer of the world’s most advanced chips, and does not have the capability to build a semiconductor with the smallest circuit – because the United States and its allies have blocked it from purchasing the lithography equipment needed to make those chips. .

But Beijing is pumping large amounts of government funds into the region’s development, and is also expanding its military reach over Taiwan, one of the largest producers of advanced chips. According to the Semiconductor Industry Association, China accounted for 9% of global chip sales in 2020, barely behind Japan and the European Union’s global market share. That was just over 3.8 percent of global chip sales five years ago.

At the World Economic Forum this week, European Commission President Ursula von der Leyen announced plans to introduce its own legislation for Europe early next month to promote the growth of the semiconductor industry and anticipate shortages.

John Neufer, chief executive of the Semiconductor Industry Association, said Japan, South Korea, India and other countries were also introducing their own incentives to attract strategically important industries.

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

Mr. Biden’s pressure to implement the China Competition Bill comes amid growing frustration in corporate circles over his economic policies toward the country. Executives believe the administration has not yet clarified whether it is President Donald Trump. How will Trump lift any tariffs imposed on China or push Beijing for more trade concessions?

U.S. The bill, passed by the Senate, known as the Innovation and Competition Act, has a range of provisions aimed at encouraging the US economy to confront China, but focuses on રોકા 52 billion in federal investment to promote chip research, design and production. United States.

Chip funding itself has broad bilateral support and could pass legislation in the next few months, proponents say; The question is whether the other measures that have been put in the package will drown out its potential. The Senate bill includes trade-related provisions that some House Democrats may oppose, including an investigation into foreign digital trading practices.

The global shortage of chips and the accompanying fatal inflation have fueled interest in semiconductor manufacturing in the United States. But whether Congress approves billions of dollars in new funding – and how the Biden administration decides to distribute it – determines whether an investment like Intel is a one-time event or a trend.

Companies including Taiwan Semiconductor Manufacturing Company, Texas Instruments, Micron Technology and SK Group have announced recent expansion in the United States. Samsung has pledged $ 17 billion in facilities in Texas, while GlobalFoundries has committed to another factory in New York.

But the center of gravity for global industry is still in East Asia. While the United States is responsible for state-of-the-art research and design in the chip industry, it outsourced production from the world’s largest semiconductor manufacturer several decades ago to most Asian factories.

It has proved to be a weakness as epidemic shutdowns have led to shortages of workers and raw materials in companies around the world, leading to shortages of various commodities, especially semiconductors and rising prices. Automakers in particular have been hit, with almost every major car maker forced to cut production last year.

The shortage of chips has also become one of the biggest single factors in inflation, which has now become a major grip on American voters as the midterm elections approach. Used car prices rose 37 per cent to a 40-year high in December.

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

Commerce Secretary Gina Raymondo said in a statement Friday that Intel’s investment is a win-win for the company, for American manufacturing and “for American consumers who can wait for lower prices as we bring home a product of semiconductors that sustain our economy.” To run. “

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

Mr. Neufer said his industry appreciated the focus of the White House on the sector, which encouraged companies to share more information. “But the reality is that the government can do just that,” he said. “These are very complex, deep global supply chains, and the market just has to work through them.”

Katie Edmundson Contribution Report.

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