May 19, 2022

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Biden expects Intel’s US investment to improve its Chinese agenda

WASHINGTON – In celebration $ 20 billion investment by Intel At a new semiconductor plant in Ohio, President Biden on Friday sought to launch the stagnant elements of his economic and national security agenda: a major federal investment in manufacturing, research and development in technologies that China also wants to dominate.

The other two main legislative priorities in Congress – the Built Back Better Act and the Law to Protect the Right to Vote – Mr. Biden pushed for another bill, which has significant bipartisan support.

But he has lost seven important months from the Senate Passed the scale, A broad-based competitive China bill allocating nearly a quarter trillion dollars to the range of domestic chip production, artificial intelligence research, robotics, quantum computing and other technologies. Bill amount Very Comprehensive Business Policy Law In American History.

Speaking at the White House, Mr. Biden said the United States was in “fierce economic and technological competition” with China. He deliberately chose words that, although obvious to American ears, have in recent months been opposed by Chinese officials to the use of the word “rival”, declaring it to have echoes of rivalry like a Cold War.

“We are going to insist that everyone, including China, play by the same rules,” he said. Biden continued. “We are going to invest in the United States, in American inventions, in American communities, in American workers, whatever it takes.”

He argued that the initiative would be a long-term solution to supply chain disruptions and rising inflation, and to free the US armed forces from dependence on foreign territories.

A few months later, he rarely mentioned the China Competition Bill, as he did not want to focus on other elements of his agenda. Biden said Friday that it must be implemented “for our economic competitiveness and our national security.”

“Today, despite being at the forefront of chip design and research, we produce 10 percent of computer chips,” he said. “We do not have the capability to make more advanced chips now.”

The widespread shortage of chips needed for everything from cars and washing machines to medical equipment and electrical grids, by some estimates, forced some factories to close their production lines and knocked out the full percentage of US growth last year.

Although the Biden administration will charge Intel’s new investment near Columbus, Ohio, as part of a solution to the supply chain disruptions that have led to global chip shortages and inflation, the plan will do little to solve any economic problems in the short term. The first phase of the Ohio plant, Intel said, is an investment of up to $ 100 billion, which is not expected to be operational until 2025, and many analysts predict that the chip shortage will subside later this year.

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But while providing positive headlines to the White House, Intel’s plans, Mr. As lawmakers compete with ambitious bills on infrastructure, social spending and the right to vote, a key component of Fiden’s agenda, it will help create inspiration. Speaker Nancy Pelosi on Thursday indicated that House committees would soon return to talks with the Senate to move Chinese competition law to a referendum.

When the bill passed the Senate by a wide margin in June, it was sold as part of a program and a measure to prevent its biggest geopolitical adversary from leaving the United States in danger.

China is not yet the world’s largest producer of sophisticated chips, and does not have the capability to build semiconductors with small circuits – as the United States and its allies have been prevented from purchasing the lithographic equipment needed to make those chips. .

But Beijing is paying a lot of government funding to grow the sector, and it is also bending its military range over Taiwan. One of the largest manufacturers Advanced chips. China will account for 9 percent of global chip sales by 2020, lagging behind the global market share of Japan and the European Union. According to the Semiconductor Industry Association. It accounted for 3.8 percent of global chip sales five years ago.

At the World Economic Forum this week, Ursula von der Leyen, President of the European Commission, Announced plans Europe is proposing its own legislation early next month to boost the growth of the semiconductor industry and anticipate shortages.

John Newfer, chief executive of the Semiconductor Industry Association, said Japan, South Korea, India and other countries were introducing their own concessions in an effort to attract industry of strategic importance.

“The clock is ticking,” Mr. Newfer said. “None of us work in a vacuum. It’s a global industry.

Mr. Biden’s drive to implement China’s competitive bill comes amid growing frustration in corporate circles over his economic policies towards the country. Executives have complained to management Not yet clarified President Donald J. on China. Whether it will remove any of the taxes imposed by Trump or how it will push Beijing for more trade concessions.

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The bill, known in the Senate as the U.S. Innovation and Competition Law, contains various rules aimed at capturing the US economy from China, but its core focus is on $ 52 billion in federal investment in chip research, design and production. United Nations.

Chip funding has broad bipartisan support and supporters say it could be enacted soon in the next few months; The question is whether other activities in the package will drown out its opportunities. The Senate bill contains a number of rules regarding trade that some House Democrats may oppose, including an inquiry into foreign digital trading practices.

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The global shortage of chips and the accompanying alarming inflation have aroused much interest in attracting semiconductor production to the United States. But whether Congress approves billions of dollars in new funding – and how the Biden administration decides to distribute it – is likely to determine whether an investment like Intel will occur once or for all.

Companies including Taiwan Semiconductor Manufacturing, Texas Instruments, Micron Technology and SK Group have all announced recent expansions in the United States. Samsung has promised $ 17 billion facility In Texas, Global Foundries has promised Second factory In New York.

But the center of gravity for global industry is still in East Asia. While the United States accounts for much of the sophisticated research and design in the chip industry, it has gone from being the world’s largest semiconductor manufacturer decades ago to largely outsourcing production to Asian factories.

This has proven to be an impact as epidemic-related strikes have left companies around the world short of workers and raw materials. Automakers in particular have been hit Forced to reduce production Last year.

The chip shortage has also become one of the biggest single factors triggering inflation, and now that the midterm elections are approaching there is a major grip among American voters. Inflation hit December is the highest in 40 years, A 37 percent increase in the price of used cars.

In an effort to alleviate the chip shortage, Biden management convened meetings with semiconductor executives, set up a global alarm system to detect shortages, and requested extensive information from chip companies about potential disruptions. The Department of Commerce is expected to release some of that information publicly by the end of this month.

Commerce Secretary Gina Raymondo said in a statement on Friday that Intel’s investment in U.S. and manufacturing is a “success for American consumers who expect lower prices when they bring home the semiconductors that hold our economy.”

But analysts say management does not have much control over any short-term trends in the industry, given the length of time it takes to build semiconductor facilities.

He said his industry appreciates the White House’s focus on the sector, including encouraging companies to share more information. Newfer said. “But the truth is, it can only be done by the government,” he said. “These are very complex, deep global distribution chains, and the market must operate through this.”

Katie Edmundson Contributed report.