Commerce Secretary Pushes CHIPS Act, Build Back Better at Detroit Economic Club Appearance

U.S. Commerce Secretary Gina Raimondo used an appearance at a Detroit Athletic Club gathering Monday to tout President Joe Biden’s $1.2 trillion, bipartisan infrastructure plan and to push for passage of two other initiatives she believes are crucial to solving both the ongoing chip shortage crisis and the nation’s supply chain issues.

U.S. Commerce Secretary Gina Raimondo and Detroit Mayor Mike Duggan talk about the economy at Monday’s Detroit Economic Club luncheon.

And the three pieces of legislation – the infrastructure bill already signed into law by President Biden, Biden’s Build Back Better plan and the CHIPS Act, which would get the U.S. more heavily into the semiconductor game – are tied together to achieve success, in Raimondo’s eyes.

“I’m thrilled to be here on the heels of an historic accomplishment, which is the passage of the … bipartisan infrastructure bill. It will be a great shot in the arm for Michigan and the manufacturing industry,” said Raimondo, who was the first female governor of Rhode Island. “Because of that bill … we’re going to be able to fix roads and bridges and lead pipes, expand broadband and make the largest ever investment in electric vehicles, all right here in Michigan. And it’s going to create thousands of good jobs in the process.

“Next we need the Senate to pass the Build Back Better bill so we can train the workforce for all of these jobs,” she added. “Build Back Better, which is in the Senate now, will enable record investments in workforce training, universal public pre-K, affordable child care and innovation.”

Raimondo hailed the Michigan economy, which she said grew at the third-strongest rate (8.3%) in the country in the second quarter. But in order for the U.S. economy to “thrive and compete, internationally and globally,” she said, the country must “invest domestically.”

She called for investment in the country’s supply chains and manufacturing centers and “specifically investing in the semiconductor industry” which she said was “invented in America.”

“Thirty years ago we produced the chips we needed — 40% of all chips were made here in the U.S.,” Raimondo said. “Over time, like a lot of other manufacturing, we watched that decline. Today we produce 12% of global chips.

“Guess what percent of leading-edge chips we make in America? Zero,” she added. “Artificial intelligence, quantum computing … all that stuff that’s the need of the future and relies on the most advanced chips … none of it is made in America.”

That appears poised to change. South Korean technology giant Samsung wants to build a $17 billion semiconductor plant in Texas to make advanced chips. And, according to the Wall Street Journal, Taiwan Semiconductor Manufacturing has started construction on its $12 billion Arizona plant that will go into mass production in 2024.

Ford and General Motors also appear poised to get into the chip business. According to The Journal, Ford has entered a strategic agreement with U.S.-based semiconductor manufacturer GlobalFoundries to develop chips.

GM, meanwhile, is said to be hooking up with some of the largest semiconductor companies – according to the WSJ they include Qualcomm and NXP Semiconductors NV – with agreements in place to co-develop and manufacture chips.

Raimondo praised both automakers Monday.

“I was pleased to see Ford and GM announce their partnerships,” she said. “They’re not standing still. They’re being as creative as possible to address the short-term problem.”

In order for the country to address the chip shortage, Raimondo said, the U.S. House “must pass” the CHIPS Act, which has already passed the Senate. The legislation supports the U.S. production of semiconductor chips.

According to Raimondo, among the things the act contains is $52 billion to allow the Commerce Departent to set up a semiconductor fund, which she said will be used to “incentivize domestic manufacturing of chips.”

The act, according to Raimondo, also establishes a National Semiconductor Technology Center, to further research and development.

“It’s not just making the chips,” Raimondo said. “If we want to stay at the cutting edge, we have to lead in innovation and R&D.”

U.S. Rep. Debbie Dingell, who introduced Raimondo at the DEC event and who has been pushing the CHIPS Act, said it’s vital to U.S. success in the semiconductor arena.

“It’s critical to the United States’ competitiveness,” said Dingell, who’d like to see it passed before Christmas. “It should have been passed months ago.”

Raimondo shares that sense of urgency.

“Here’s the reality: We can’t wait, because the rest of the world isn’t waiting,” she said. “China, Taiwan, the EU, other countries are incentivizing and subsidizing the production of chips right now, and they have been for a long time.”

The pressing nature of the problem becomes obvious when considering Biden’s long-term goal of having half the cars on the road by 2030 be electric vehicles, an issue he pressed in a recent trip to Michigan.

According to Raimondo, the average EV uses some 2,000 chips, and that need will only rise (one manufacturer told Raimondo they were going to double their chip needs in the next five years).

And chips also “power innovation,” she said, including in areas such as health care, transportation, the digital economy and “every sector of our economy

Creating a high-tech innovation hub, creating EVs, leading the world in EVs, all require chips and chip production, Raimondo said, and right now “we purchase the majority of our chips from Taiwan.”

“It’s impossible to underscore the importance of solving this problem,” Raimondo said. “Forecasts indicate strengthening American supply chains and manufacturing will boost the GDP by up to $55 billion and add 95,000 good jobs.”

Detroit Mayor Mike Duggan, who conducted a conversation with Raimondo at the DEC event, called her “impressive” and said he believes Biden is a president “who understands … we’re going to have to raise our game.”

“If you look at what GM, Ford and Stellantis are doing, we’re heading in the right direction,” Duggan said. “We’ve been behind the curve … but we’re moving in the right direction.”