Raimondo is trying to get the US on a $52 billion chip program

WASHINGTON (AP) — On State of the Union night, Secretary of Commerce Gina Raimondo walked down the aisle and found her seat in front of Republican Senate leader Mitch McConnell.

McConnell, not known for wasting words, complimented Raimondo on a recent article about her efforts to restore the US to the world leader in advanced computer chips.

Factories, automobiles, appliances, electronics, toys, toothbrushes and weapon systems all depend on semiconductors, and the need for global dominance in this small sector of the world economy is a rare area where Republicans and Democrats share the same vision.

“Nice article by George Will,” McConnell said, referring to the conservative columnist’s comments on Raimondo.

“Thank you. I’m going to make that happen, and I’m going to do it responsibly,” Raimondo said of the $52 billion lawmakers approved last year for research and construction of semiconductor fabs. She stressed to the Kentucky senator that national security is at stake.

“That’s why I voted in favor,” McConnell said.

After a number of chip companies announced new US factories, Raimondo is in the process of delivering on the government’s promised financial commitment. Starting next week, semiconductor companies will begin the application process to qualify for $39 billion in government funding to fund their expansion.

Chips are integrated circuits embedded in a semiconductor, a material – specifically silicon – that can control the flow of electrical current. The terms “chip” and “semiconductor” are often used interchangeably.

In a speech Thursday at Georgetown University, the Commerce Secretary plans to call for the development of two major semiconductor clusters within the US with a network of factories, research labs and other infrastructure. But realizing that vision will require training tens of thousands of workers and finding scientific breakthroughs to reduce the cost of manufacturing advanced chips.

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“There have been times in history,” Raimondo said in an interview, “when a president used the pursuit of a goal, a technological goal, like putting a man on the moon, like the world’s leadership in nuclear technology, to to catalyze the whole country to do its part to achieve that goal.”

To succeed, she said, the US needs a societal effort. It’s the kind of mobilization akin to World War II or the space race that grandparents spoke of before younger generations, a defining moment for the nation with the world’s largest economy and military.

“We must mobilize America,” Raimondo said.

The government expects the $39 billion for factories to generate at least 10 times that in private sector investment. The potential benefits come from the spillover effects of computer chip manufacturing jobs, which typically fetch over $100,000, leading to additional economic activity and business creation.

The Biden administration needs to get universities to double the number of electrical engineers they pump over the next 10 years, Raimondo said. Community colleges and high schools need to do more to work with companies to ensure the next generation of workers get the training to get into these jobs.

The new law also provides $11 billion to fund a research partnership between universities, companies and national laboratories — all with the goal of increasing a chip’s processing power and lowering the cost of semiconductors so there are buyers in a global market .

“We need to cut costs — in a big way — which means innovation, innovation, innovation,” Raimondo said.

Pointing out that the real work is administering the law and overseeing how the funds are used, critics warn that simply spending money does not guarantee the desired results and could lead to economic distortions.

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“The CHIPS bill is a work in progress, to say the least,” said Anthony Kim, research fellow at the conservative Heritage Foundation. “Spending more is not and cannot be a solution, especially in the current economic environment where inflationary pressures are still plentiful.”

The promise of government support is driving construction plans, though it’s still at the beginning of a process that will take years. Big chip companies like TSMC, Intel, Micron, IBM and others have so far committed about $200 billion to invest in new factories, according to the White House. Last week, Texas Instruments announced an $11 billion investment to expand its semiconductor manufacturing facility in Utah.

The movements are of a long-term nature. After a shortage as the global economy began to recover from the coronavirus pandemic in 2021, there is currently a relative glut of chips available. White House officials said the goal of their industrial strategy is to target sectors where global demand will exceed available supply over the long term, while protecting technologies critical to more accurate weapons and battlefield communications.

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