Hundreds of semiconductor CEOs jointly implore the United States to pass a $52 billion chip bill

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According to foreign media reports, large American technology companies have had enough of pending legislation that Congress has been unable to pass, including tens of billions of dollars in subsidies to promote the country's semiconductor manufacturing and research and development.

More than 100 American executives, including the CEO of Amazon, the CEO of Google's parent company Alphabet, Microsoft, Dell, IBM, Salesforce, VMware and dozens of other technology companies and technology-adjacent companies, signed a letter calling on the U.S. Congress to pass a bill aimed at improving the U.S. economic competitiveness compared to China, especially in the field of chip manufacturing. Previously, the U.S. Senate and House of Representatives introduced different versions of the "American Competitiveness Act of 2022" in an attempt to contain and suppress China, but the bill was temporarily shelved due to failure to reach a consensus.

"The rest of the world will not wait for the United States to act. Our global competitors are investing in their industries, workers, and economies, and Congress must act to increase American competitiveness," the letter said.

The letter, organized by the Semiconductor Industry Association, was also signed by semiconductor industry executives, including AMD CEO Lisa Su, Intel CEO Pat Gelsinger, GlobalFoundries CEO Thomas Caufield, Micron Technology CEO Sanjay Mehrotra and Nvidia General Counsel Timothy Teter.

"Leaders in our industry are under pressure to build chip factories to meet the growing demand for chips. They can't wait," said Norph, president and CEO of the Semiconductor Industry Association. He also said the bill will "ensure that more chip factories will be built in the United States, not overseas." In addition, the association also called for investment tax breaks for the semiconductor manufacturing and design industries in the bill. Reuters said that the U.S. Congress's competition bill authorizes the use of $52 billion in federal funds to invest in the semiconductor manufacturing industry.

After a few months of no progress, I wrote to you.

The letter is another sign of frustration among tech executives after the America Competitiveness Act languished in Congress for months. The House passed its version of the bill in February, while the Senate passed its version in June 2021, but the Senate and House have been trying to reconcile differences in their respective chip subsidy bills, but such efforts have faltered recently.

“We have lost several quarters since the Senate acted last year, and it is time for us to move on quickly,” Intel’s Gelsinger told Congress in March.

The problem is that the United States has been lagging behind Asian countries in semiconductor manufacturing for the past few decades. This has caused the U.S. share of chip manufacturing to drop from 37% in 1990 to 12% today. At the same time, 80% of chip production takes place in Asia.

Tech companies and government officials push for chip subsidies for a variety of reasons: to fight future chip shortages and inflation; to reduce reliance on Asian chipmakers; to hedge against future geopolitical instability and to increase U.S. manufacturing jobs.

Bloomberg reported last week that the legislation "risks collapsing in Congress" in the face of growing skepticism among Republicans and the fact that the country faces other problems, such as a seemingly never-ending problem with gun violence.

Bloomberg's report said some Democrats and Republicans were concerned that the White House had not done enough to rally Congress, especially members of the House of Representatives, to support the bill. Meanwhile, White House officials complained that the private sector had not done enough to communicate to politicians the importance of passing the bill.

That complaint appears to have worked, given that the Semiconductor Industry Association managed to get executives from more than 120 companies to sign Wednesday’s letter. While the letter is short, it gets to the point in the second paragraph:

The competition legislation pending in Congress is critical to the U.S. economy, national security, and supply chain resiliency. The bill includes important measures to invest in research and technology leadership, workforce development, domestic manufacturing, and strengthening supply chains, including in key sectors such as semiconductors that are vital to our entire economy.

Foreign chip giants also want subsidies

While many of the signatories to Wednesday's letter represent U.S. companies, some are foreign, too, most notably chip foundry giants TSMC and Samsung.

As Taiwan's TSMC and South Korea's Samsung are spending billions of dollars to build new manufacturing plants in Arizona and Texas, respectively, both Asian semiconductor giants are looking to get a piece of U.S. chip subsidies.

The companies, which benefit from their own largesse, said in March that the US needed to consider foreign firms when doling out chip subsidy cash. The x86 giant has remained silent since Intel proposed that the funds be used only for domestic companies.

“Arbitrary favoritism and preferential treatment based on where a company is headquartered is not an effective or efficient use of grant funds and ignores the reality of public ownership of most leading semiconductor companies,” TSMC said in a statement to the Commerce Department.

In short, many companies at home and abroad hope that the United States will use taxpayers' money to promote chip manufacturing and research.