SOUTHFIELD, MI – The production of semiconductors, a major bottleneck for automotive production for the past two years, is expected to get a boost this week when Congress takes a final vote on a $54.2 billion bill designed to subsidize and encourage chip production in the U.S.
During a press conference hosted by Tier 1 supplier Lear, which has suffered its own delays from a shortage of chips, CEO Ray Scott and Michigan Democratic Sens. Debbie Stabenow and Gary Peters describe the legislation as a major win for automakers and suppliers throughout the U.S.
“We’ve got the votes,” says Stabenow. “This is actually going to happen, and it can’t happen too soon. With the pandemic, we found out what happens when we don’t make semiconductors in the United States.”
Stabenow (pictured, below left) says the Creating Helpful Incentives for the Production of Semiconductors (CHIPS) for America Act cleared the Senate on a key vote on cloture, which means it cannot be the target of a filibuster that would block final passage. All but one Democrat and 15 Republicans are lined up to approve the bill, which would send it to the House of Representatives – where it already has passed – for a final vote.
The COVID pandemic in 2020 touched off a major inventory shortage in the auto industry that continues today. The lack of semiconductors alone prevented 1.5 million vehicles from being produced in the U.S. last year, which impacted manufacturers, suppliers and assembly plant workers and left many dealers with empty lots, according to the Alliance for Automotive Innovation.
Currently, the U.S. manufacturers 12% of the world’s semiconductors, down from 37% in 1990; the decline has undermined American jobs and national security, Stabenow says.
The CHIPS Act invests $54.2 billion to bring semiconductor manufacturing back to the U.S., including $39 billion to fund, build, expand or modernize domestic facilities and equipment for semiconductor fabrication; $12.5 billion for R&D to promote American leadership in advanced semiconductors and 5G communication; and $2.7 billion for boosting supply chains and the semiconductor workforce.
Peters (pictured, below left) says the legislation sets aside more than $2 billion to expand the manufacturing of so-called legacy chips widely used in the auto industry. Semiconductor makers would have preferred to have all the money earmarked for advance semiconductors. But automakers made a persuasive case for including legacy chips in the bill because of their usefulness in controlling critical functions in modern vehicles, the senator notes.
The legislation will ensure new plants will be built in the U.S., reducing the country’s dependence on foreign manufacturers, Peters tells Wards.
When it appeared the CHIPS Act legislation was stalled, Peters says, the European Union made a major pitch to Intel to drop its plans for a new plant in the Midwest. However, Intel now plans to build two new plants 30 miles (48 km) east of Columbus, OH.
A major lobbying campaign by automakers and other manufacturing companies helped counter a threat by Senate Minority Leader Mitch McConnell to block the legislation, Peters says, adding the bill will ease some of the inflationary pressure created by the shortages of new vehicles.
