The Biden administration used the bully pulpit this week to press Congress to finally pass the Bipartisan Innovation Act, which aims to bolster U.S. supply chains and includes $52 billion to expand domestic semiconductor manufacturing.
The tiny silicon chips have been in short supply since the first year of the pandemic when demand unexpectedly surged and industries that were initially anticipating a recession found themselves competing for orders. That mismatch between supply and demand is still playing out today, and the Biden administration is hoping the legislation can help avoid future shortages by encouraging private companies to build new semiconductor manufacturing facilities here in the United States.
Both the House and Senate have passed their own versions, but the reconciliation process has dragged on since last summer. As a centerpiece of President Biden's domestic agenda, the administration has pushed hard to make the bill a priority, including convening a roundtable of CEOs in the chip industry on Wednesday.
"It's really about investing now so that the United States isn't in a position going forward where we don't have the number of microchips that we need for our industries to produce," Deputy Commerce Secretary Don Graves told Cheddar.
To some extent, the private sector is already stepping up. The industry in 2021 announced nearly $80 billion in new investments in the U.S. through 2025, according to the Semiconductor Industry Association. This includes projects such as the $20 billion investment Intel is making in Ohio to build a semiconductor production hub.
Even without the $52 billion in the legislation, Graves said the Biden administration has been working with the semiconductor industry to "see around the bend" at what kind of shortages or other supply chain issues might be coming down the pike.
This has required communicating closely with an industry that previously was much more tight-lipped. The administration has made some strides, which include getting individual companies to share proprietary information.
The war in Ukraine is expected to further complicate global supply chains, and Graves said the Biden administration is anticipating more problems going forward.
"This was a war of choice by Vladimir Putin. He did not need to engage in this needless aggression and go against all manner of international rules, but he did, and that's going to have an impact broadly on supply chains and inflation."
However, Graves noted that the administration is still working on fully understanding the industry's needs, and how supply chain issues could impact its production.
"We believe that we will be able to meet demand for the near-term, but we're still trying to get our arms around exactly which companies need which materials."