U.S. Senate Democrat leader Chuck Schumer put forth an emergency funding proposal last week that would set aside $52 billion to support the American semiconductor manufacturing industry. This week, U.S. Commerce Secretary Gina Raimondo said the federal funding could help drive hundreds of millions of dollars in private investment for the U.S. chip-making sector – a change that could result in several new chip plants being built on American soil.
“We just need the federal money to unlock private capital,” Raimondo said, as quoted by Reuters. “It could be seven, could be eight, could be nine, could be 10 new factories in America by the time we’re done.”
Schumer’s proposed bipartisan bill would sideline $39 billion for production and R&D incentives, along with another $10.5 billion for federally-funded programs and institutions like the National Semiconductor Technology Center and National Packaging Manufacturing Program.
The chip shortage has hit the Detroit Big Three hard, cutting around 325,000 vehicles from Ford’s production schedule so far and 278,000 from GM’s. Ford has said the chip shortage could trim its second-quarter earnings by about half and may continue to affect its production output throughout 2021 and into early 2022.
“American manufacturing has suffered rather dramatically from a chip shortage,” Schumer said when introducing the $52 billion bill last week. “We simply cannot rely on foreign processors for chips. This amendment will make sure that we don’t have to.”
In 1990, the U.S. had a 37 percent share of global semicoductor manufacturing – a figure that has now dwindled to just 12 percent. The majority of semiconductor chips are currently made in Asian countries, including China, Taiwan, Korea and Japan.