Big Tech begs Congress to pass $52bn chip subsidies bill

This silicon business ain't cheap, you know, say execs at Alphabet, Amazon, Microsoft, Nvidia etc

Big Tech in America has had enough of Congress' inability to pass pending legislation that includes tens of billions of dollars in subsidies to boost semiconductor manufacturing and R&D in the country.

In a letter [PDF] sent to Senate and House leaders Wednesday, the CEOs of Alphabet, Amazon, Dell, IBM, Microsoft, Salesforce, VMware, and dozens of other tech and tech-adjacent companies urged the two chambers of Congress to reach consensus on a long-stalled bill they believe will make the US more competitive against China and other countries.

"The rest of the world is not waiting for the US to act. Our global competitors are investing in their industry, their workers, and their economies, and it is imperative that Congress act to enhance US competitiveness," said the letter.

Organized by the Semiconductor Industry Association, the missive is also signed by top executives in the semiconductor industry, including AMD CEO Lisa Su, Intel CEO Pat Gelsinger, GlobalFoundries CEO Thomas Caufield, Micron Technology CEO Sanjay Mehrotra, and Nvidia General Counsel Timothy Teter.

The association said it hopes the final legislation will include a measure for investment tax credits that semiconductor manufacturing and design companies can advantage of in addition to the $52 billion in chip subsidies that has been the heart of the bill.

Letter comes after months of no progress

The letter is yet another sign of frustration from tech executives after a US competitiveness bill has stalled in Congress for several months. The House of Representatives passed its version of the legislation in February while the Senate passed its version in June 2021, but the Senate and House have been attempting to reconcile differences in their respective chip subsidies bills, but such efforts have faltered recently.

"We've already wasted several quarters since the Senate acted last year, and now it's time for us to move forward rapidly," Intel's Gelsinger told Congress back in March.

At issue is the problem that the US has been trailing Asian countries in the past few decades in semiconductor manufacturing. This has resulted in the US share of chipmaking falling from 37 percent in 1990 to 12 percent today. Meanwhile, 80 percent of chip production happens in Asia.

Tech companies and government officials have pushed for chip subsidies for multiple reasons: fighting against future chip shortages and inflation; reducing reliance on chipmakers in Asia; hedging against future geopolitical instability, particularly in light of concerns about Chinese aggression against Taiwan; and growing US manufacturing jobs.

The long and winding road

Bloomberg reported last week that the legislation "risks collapsing in Congress" in the face of increased skepticism from Republicans, plus the fact that the country is facing other issues, like the seemingly never-ending problem of gun violence.

Bloomberg's report said there are concerns from some Democrats and Republicans that the White House hasn't been doing enough to rally Congress, particularly House members, around the bill. At the same time, White House officials complained that the private sector hasn't done enough in communicating to politicians the importance of passing the bill.

That complaining seemed to work, given that the Semiconductor Industry Association managed to get executives at more than 120 companies to sign Wednesday's letter. While the letter is rather short, it got to the point in the second paragraph:

The competitiveness legislation pending in Congress is critical to the U.S. economy, national security, and supply chain resilience. The bill includes important measures to invest in research and technology leadership, workforce development, and domestic manufacturing and strengthened supply chains, including investments in key areas such as semiconductors vital to our entire economy.

Foreign chip giants want US subsidies too

While many of the signatories of the Wednesday letter represent US companies, there are a few foreign firms represented too, most notably chip foundry giants TSMC and Samsung.

The two Asian semiconductor behemoths are hoping to get their share of US chip subsidies since Taiwan-based TSMC and South Korea's Samsung are in the midst of multibillion-dollar plans to build new manufacturing plants in Arizona and Texas, respectively.

The companies, which have benefited from generous support in their home countries, spoke out in March about the need for the US to consider foreign firms when giving out chip cash. The concerns were made after Intel once proposed that the funding only be used for domestic companies, a matter that the x86 giant has since become silent on.

"Arbitrary favoritism and preferential treatment based on the location of a company's headquarters is not an effective or efficient use of the grant and ignores the reality of public ownership for most of the leading semiconductor companies," TSMC said in a statement to the US Department of Commerce in March.

In all, there are a lot of companies, both foreign and domestic, that are hoping the US will use taxpayer dollars to boost chip manufacturing and research. But we understand why it's been difficult to make the bill a priority, given several compounding issues facing the US, including gun violence, inflation, and attempts to subvert democracy, just to name a few. ®

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