Commerce Secretary Gina Raimondo reports it’s time for the U.S. to get “serious” about reviving semiconductor chip production as the auto industry pivots to electric vehicles.
Raimondo urged Congress to pass $52 billion in funding to boost domestic production of the chips at the Detroit Economic Club on Monday.
The ongoing chip crunch has stripped dealership inventories, pushed up vehicle prices, and cost automakers an estimated $210 billion globally in lost production this year.
“We’re at an inflection point and we have to make choices,” Raimondo told reporters ahead of the visit. “If we're serious about restoring American leadership in the global economy, we have to start by rebuilding our semiconductor industry so we can meet the demands of this moment.”
Raimondo attended a roundtable at the UAW Region 1A headquarters in Taylor early Monday alongside Rep. Debbie Dingell, D-Dearborn, Sen. Gary Peters, D-Bloomfield Township, Sen. Debbie Stabenow, D-Lansing, UAW President Ray Curry and others.
Afterward, she spoke at the Detroit Economic Club with Dingell and Detroit Mayor Mike Duggan.
“Michigan understands what a healthy and vibrant manufacturing industry can mean for a state’s economy — and what happens when that manufacturing industry nearly gets wiped out," Raimondo said in a preview of her speech.
Raimondo asserts the new $1 trillion infrastructure plan will shore up Michigan’s manufacturing industries and re-shore jobs, but maintains more is needed to bolster U.S. dominance in the EV market.
The Senate passed a bill that would fund $52 billion in domestic chip manufacturing in June. The bill included a provision that would set aside $2 billion for “mature” chips for autos.
However, the House hasn’t taken up the bill. But Raimondo stresses that passing this legislation is crucial to meeting President Joe Biden’s goal that half of new vehicle sales be electric vehicles by 2030. Electric vehicles, she explains, use more chips than gas- and diesel-powered ones.
“We have to [meet that goal.] That’s necessary for our American economic competitiveness, it’s necessary if we're going to meet our climate change goals, and it's necessary to create jobs,” she said.
“This is non-negotiable. The question then becomes what will it take for us to hit those goals? I’m telling you now, we will not hit those goals if Congress doesn't quickly (fund) the CHIPS Act."
In September, the Commerce Department asked automakers, chip companies and others in the semiconductor supply chain to submit data on inventory, sales and use of chips to identify bottlenecks and increase transparency.
The request was voluntary, but Raimondo warned that the Administration might invoke the Defense Production Act to compel companies to comply if needed. Several companies raised concerns over supplying sensitive proprietary information or expressed the request set a concerning precedent that other countries might replicate.
Responses to the request were due in early November. Raimondo claimed the quality of responses will will not effect which companies receive funding under the CHIPS Act if it passes.
Around 150 companies from around the world responded to the request but Raimondo reports she cannot comment on the quality of the responses, as her team is still evaluating the data.
“It's too soon for me to say whether we'll need to invoke the DPA,” she said. “It is still an option that we have.”
Raimondo recently spoke with allied countries in Asia, where around 75% of semiconductor chips are made, about mapping the chip supply chain.
Mapping, monitoring and managing the supply chain will help the automotive industry predict problems before they become a crisis. “It will allow us to make our strategic investments in exactly the right places in the supply chain, so that auto companies, frankly, never again have to face what they're facing now,” she concludes.
Originally posted on Auto Dealer Today