President Joe Biden urged Congress to pass legislation strengthening U.S. research, development, and manufacturing of semiconductors in a move to blunt China’s ambitions to lead the world in advanced technologies.
The move comes as the rest of Biden’s agenda — a partisan spending bill, voting legislation, and filibuster reform — are stalled due to narrow congressional majorities and Democratic divisions.
“Let’s do it for the sake of our economic competitiveness and our national security,” Biden said at the White House on Friday. “Let’s do it for the cities and towns all across America working to get their piece of the global economic package. And let’s do it for the dignity and pride of this country and the American worker.”
Semiconductors, which the White House has called the “DNA of technology” in a supply chain review, are an essential component to everything from cars to smartphones to defense technologies. And they are crucial to what Biden has said is the “competition to win the 21st century.”
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China is spending billions of dollars attempting to catch up to the world’s most advanced chip manufacturers. The global shortage and geopolitical tensions with China have ramped up scrutiny over the supply chain, which is concentrated among a handful of companies.
The U.S. Innovation and Competition Act includes $52 billion to increase semiconductor production and authorize another $190 billion to strengthen U.S. technology and research.
While the legislation passed the Senate in June, 68-32, it has stalled in the House, where it has a narrower path.
Among the objections is a fight over the redirection of funding to universities and national labs, notably toward states with smaller representation in the House.
“That’s a very traditional bicameral difference. But it’s also obviously one that has been bridged hundreds of times,” said Matt Grossmann, the director of the Institute for Public Policy and Social Research at Michigan State University.
Despite its bipartisan reach, the bill has seen little play from the White House until now.
“They haven’t been out there on it. Instead, they’ve been pushing a hopeless change to voting rights and voting legislation,” Grossmann said.
That push collapsed Wednesday evening in the Senate after Democrats failed to garner the votes required for an elections-rule carveout on the filibuster. Hours earlier, Biden had railed against Republicans during a news conference, blaming them for his stalled agenda.
The president reprised the attack during a Democratic National Committee event one day later but stressed the need to hold on to the party’s congressional majorities.
“This election in 2022 is critical,” Biden said Thursday. “We have to keep control of the House and the Senate to expand our majority.”
Now, as the midterm elections approach and as the White House comes under political pressure over supply-chain delays and inflation, Democrats are looking for opportunities to make their case to voters.
A bipartisan bill that targets inflationary pressures, boosts manufacturing spending, and counters China’s advances could prove fruitful for lawmakers looking to showcase what they do in Washington.
“We are going to stamp everything we can ‘Made in America,’ especially these computer chips,” the president said, highlighting the push at the White House Friday. The president called it an effort to “bring the industrial Midwest back.”
When national security adviser Jake Sullivan met with House lawmakers to discuss the bill over the summer, the sitdown included Democratic Michigan Rep. Elissa Slotkin, who faces stiff headwinds in her reelection bid this year.
In a late November poll for Michigan’s 7th Congressional District, where Slotkin is running for reelection this year, Biden’s job approval was underwater at 40%, with 56% disapproving of his performance. Slotkin, who in 2018 ousted an incumbent Republican in her existing district, is a top target this year. Her new district would have voted for former President Donald Trump by 4 percentage points in 2016 and for Barack Obama by 3 points four years prior.
Like Biden, the Michigan congresswoman has tied China’s ambitions to narrowing opportunities at home, while her retorts to China over national security and supply chain troubles have drawn its diplomats’ ire.
Brian Stryker, a partner at polling firm Anzalone Liszt Grove Research, said surveys show Democrats losing to Republicans on messaging around China and economic competition.
“If Democrats don’t pass that competitiveness bill and have nothing to talk about on China, we will have caused our own problem there,” Stryker told Bloomberg. “I think it will really hurt Democrats at the ballot without having something to say about China and supply chain issues.”
Stryker, whose firm worked for Biden during the 2020 presidential campaign, did not return a request for additional comment.
On Friday, Biden made the pitch to industrial-base voters explicitly.
“To be able to say ‘Made in Ohio,’ ‘Made in America.’ We used to always be able to say that 25, 30 years ago. That’s what this is about,” he said.
According to the White House’s estimate, the country’s share of global semiconductor production has dropped from 37% to 12% over the last three decades.
The shortages have weighed on the economy for months, slowing production and driving up prices for consumer goods. White House economists have attributed one-third of the price increases in the core consumer price index to a surge in automobile prices.
A White House official said the administration had engaged consistently with leadership and committee members in both chambers on the bill, working to find common ground and pressing for action in the House during the fall session. It hopes a bill can be introduced before the end of January.
The White House has praised the supply chain legislation’s focus on boosting jobs and outcompeting China, comparing its appeal to Biden’s infrastructure bill.
“President Biden urges Congress to get legislation strengthening our supply chains and bringing more manufacturing back to America to his desk for his signature as soon as possible,” White House Director of Rapid Response Mike Gwin said in a statement. “This will help us outcompete China and the world economically and create good-paying jobs in America. And, it would build on President Biden’s success in his first year in making us stronger and more competitive economically — including through historic investments in our roads, bridges, ports, and more in the Bipartisan Infrastructure Law.”
As part of the administration’s effort, Intel announced a new $20 billion factory outside Columbus, Ohio, that will create thousands of new jobs.
Commerce Secretary Gina Raimondo commended Intel’s announcement, which she said would “allow us to shore up our supply chains, bring down costs, keep manufacturing facilities up and running and create American jobs.”
The multinational chipmaker came under fire this month after deleting references to Xinjiang from a letter to suppliers after facing backlash from China. The company had asked suppliers not to source products or labor from the Xinjiang region.
Asked to comment on Intel’s stepback, press secretary Jen Psaki said Friday the White House had addressed its concerns with the company, though she did not mention Xinjiang by name.
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“We have obviously spoken about concerns we’ve had. I’m not familiar with all of the specifics of their engagement in China, so I’d have to check with our team,” Psaki told reporters. “We have not held back, I should say, if we have concerns about engagement in parts of the country where there are human rights abuses.”
The investments outlined Friday won’t do much to alleviate pressure in the short term. Intel’s Ohio manufacturing hub won’t come online until 2025, while the advanced manufacturing investments in USICA could take years to move the needle.
