What it Means for The Chip Shortage If Congress Doesn’t Act

What it Means for The Chip Shortage If Congress Doesn’t Act

Contents

The U.S. Congress is holding the Chip Act. With $52 billion in funding, the bill could divert the chip shortage crisis and strengthen U.S. technology.

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What it Means for The Chip Shortage If Congress Doesn’t Act

If Congress keeps dragging its feet on the CHIPS for America Act, the consequences will be brutal. Chips are everywhere, from cars to cellphones, cloud computing, smart factories, to defense systems. Chip shortages began during the pandemic when car manufacturers slowed down, and chip makers shifted production to other booming sectors like communications. When automakers returned to the table with designs for more innovative cars, they found a severe shortage that soon spread to every industry.

Semiconductors were invented in the U.S. For decades the country was the global leader of the sector. Today, disruptions of supply chains, political tensions, the pandemic and a demand for new technologies reaching an all-time high threaten the chip manufacturing models and do not favor the U.S.

Intel, Micron, and other top U.S. chip companies raised red flags for the stalling of the CHIP Act by Congress. The $52 billion in funding —pending House approval, moved rapidly through the Senate but found Republican opposition in the House and got stuck. Nevertheless, President Joe Biden urges Congress to pass the law before Christmas in a desperate attempt to divert the 2022 chip shortage crisis consequences. Some Republicans in the House say the CHIP Act does not have the strength needed to fight China. But the law was not designed to create self-sufficient domestic U.S. chip production units or cut off dependency from the rest of the world. Instead, it was intended to strengthen the U.S. semiconductor sector and navigate a severe crisis that only promises to get worse.

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Shortages, Inflation, Job Losses And National Security

In 1990 the U.S. manufactured 37 percent of all semiconductors globally. However, the Semiconductor Industry Association, SIA, explains that it only produces 12 percent today. SIA says that the drop was caused by a “lack of ambitious investment and lack of government incentives.” Thanks to government incentives and support, Asian governments now produce 75 percent of all semiconductors globally. Micron said they plan a rollout of $150 billion if the U.S. Government commits to incentives. Intel added they would put in $20 billion but need the government incentives to fill in the gaps.

Semiconductors are one of the top U.S. exports. One million six hundred thousand American jobs depend on the sector. Chips have a symbiotic relationship with innovation. U.S. companies dedicated to technologies like AI, 5G, space technology, and auto-industry will be seriously harmed if the U.S. loses leadership in semiconductors. Internationally, the U.S. will lose leverage in the global tech race. Nationally, downplaying the chip shortage crisis will only create shortages of products, price increase and inflation, loss of jobs, and social, economic and political unrest. Chips have also played a vital role in public health, accelerating vaccine development, tracing and testing COVID, increasing telemedicine and medical equipment.

The Chip Act is designed to double the construction of fabs for logic, memory, and analog semiconductor facilities in the next ten years. This will decrease dependency on unstable regions of Asia sensible to disruptions caused by natural disasters, trade wars, political tensions, supply chain crises, or global health crises. As innovation takes no-rest, and chip demand increases, the Chip Act waits in Congress to see the light of day.

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Link Source : https://screenrant.com/chips-act-52billion-bill-us-congress/

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