A bipartisan group of over 30 lawmakers on Thursday sent a letter to House Speaker Nancy Pelosi (D-Calif.) and Minority Leader Kevin McCarthy (R-Calif.) warning them of the “dire consequences” the automotive industry faces if they fail to swiftly advance legislation that would provide $52 billion in funding for semiconductor chips, including $2 billion set aside for chips used by automakers.
The Senate voted 68–32 in June to approve a sweeping package of legislation that aims to boost the country’s ability to compete with Chinese technology, including providing $52 billion for chips and $2 billion in funding dedicated to the type of chips automakers use.
However, the measure has stalled in the House, leaving automakers across the globe forced to drastically cut production due to supply shortages. Automakers are also facing a shortage of materials and labor.
In their letter on Thursday, lawmakers said there is a “critical need” to address the supply chain crisis and advance the legislation immediately.
“The ongoing semiconductor shortage is hurting the automotive industry, American workers, and our nation’s competitiveness by the hour,” the lawmakers wrote. “While you have already heard from many members on the critical need to address this ongoing supply chain crisis, we are sending this letter to reinforce the dire consequences the automotive industry as a whole—and the nation—faces if we fail to advance legislation soon that would fully fund the CHIPS Act and provide the necessary support for the industry at the same time.”
“As you may know, the CHIPS Act authorization was enacted into law at the end of 2020 as part of the William M. (Mac) Thornberry National Defense Authorization Act (NDAA) but never received appropriations,” the lawmakers continued. “To address this, in June of 2021, the U.S. Senate advanced the U.S. Innovation and Competition Act, which contained $52 billion to expand domestic semiconductor capacity, including a provision to provide $2 billion specifically for critical ’mature node' semiconductor chips used in the automotive industry.”
Lawmakers added that in order to address the chip shortage crisis both “head-one and long-term,” the “first and best thing we can do is advance immediate, identical legislation that includes this important appropriation for ’mature node' semiconductors.”
Members of the Problem-Solvers Caucus (PRC) in the House of Representatives also voted to endorse the legislation.
“Right now, every single end market for semiconductors is up simultaneously; I’ve been in this industry 27 years, I’ve never seen that happen,” Murphy said during a CNBC Technology Executive Council event. “If it stays business as usual, and everything’s up and to the right, this is going to be a very painful period, including in 2022 for the duration of the year.”
While multiple chip producers, including Japanese chipmaker Renesas Electronics, Intel, and TSMC have all expressed plans to double down on manufacturing, Murphy noted “that’s not going to kick in until 2023 and 2024—so there’s this painful period.”
Last month, consulting firm AlixPartners predicted the global semiconductor shortage will lead to 7.7 million fewer vehicles produced in 2021, costing the auto industry $210 billion globally in lost revenue in 2021, a sharp increase from the May projections of $110 billion in foregone sales and 3.9 million fewer vehicles built.
