Auto-State Governors Press Congress to Pass Aid for Chipmakers
(Bloomberg) -- Governors from nine states, led by Michigan’s Gretchen Whitmer, have sent a letter to top congressional leaders urging them to advance legislation that would provide $52 billion in aid to semiconductor producers and ease a shortage for manufacturers.
The letter, prepared for delivery on Wednesday, to House Majority Leader Nancy Pelosi, Minority Leader Kevin McCarthy and their counterparts in the Senate, Chuck Schumer and Mitch McConnell, asks for swift approval of the CHIPS Act, intended to expand U.S. semiconductor production. The governors, largely from auto-producing states, made a case that the shortage has taken a brutal toll on the automobile industry, leading to lost production and jobs.
“There is no question that our nation’s automotive manufacturing industry -- more than any other sector -- has been hit hardest by the global semiconductor shortage,” Whitmer wrote. “Production at auto plants across the country has been idled, impacting more than 575,000 auto-related American jobs.”
Along with Whitmer, the signers were Governors J.B. Pritzker of Illinois, Tony Evers of Wisconsin, Roy Cooper of North Carolina, Kentucky’s Andy Beshear, Tom Wolf of Pennsylvania, Kay Ivey of Alabama, Laura Kelly from Kansas and Gavin Newsom of California.
Ivey is a Republican. The others are Democrats.
The chip crisis has hurt profits at automakers including Michigan-based Ford Motor Co. and General Motors Co. North American plants typically build 17 million vehicles in a year and will have lost 4 million units worth of production in 2021, according to researcher LMC Automotive. Consulting firm Alix Partners has said the shortage has cost the global auto industry $210 billion in revenue.
Legislation to provide $52 billion in incentives to bolster chip production was included in a broader bill passed by the Senate in June aimed at making the U.S. more competitive with China. Of the money approved, $2 billion would go toward chips used by automakers, the letter said.
But the Senate bill stalled in the House as that chamber pieces together its own version of the competitiveness bill. That effort has taken a back seat to the debate over President Joe Biden’s sweeping economic agenda.
There has been increasing sentiment among some Republicans and Democrats for breaking off the grants and incentives for chip manufacturers from the Senate bill and passing it as standalone legislation or as part of a bill funding the government.
Industry representatives have been pressing Congress and the administration to approve the chips money by the end of the year so that plans they have to build facilities in the U.S. can go forward in the face of government subsidized programs in other countries. The White House also is pushing for approval, a National Security Council official said last week.
“We are doing everything we possibly can to get CHIPS Act across the finish line before the end of the year,” the official, Peter Harrell, senior director for international economics and competitiveness, said at an online event on chip-supply difficulties that was sponsored by the AT&T Policy Forum.
The U.S., which still leads the world in chip design, has lost a significant share of global chip manufacturing capacity over the last 30 years, falling to 12% from 37% in 1990, according to the Semiconductor Industry Association.
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