Senate Majority Leader Chuck Schumer (D-N.Y.) is making a push to include provisions in the National Defense Authorization Act (NDAA) that would increase U.S. microchip production amid persistent chip shortages around the world.
Today, most chips are produced in Southeast Asia, with Taiwan and Japan being two of the largest producers. However, these two relatively small nations have been unable to keep up with the huge demand.
And concerns over China’s overt ambition to conquer Taiwan have only exacerbated the situation, igniting fears of a Chinese near-monopoly on microchips if the communist state moves to invade the island nation.
Because of the near-ubiquitous importance of microchips to the 21st century, such a Chinese monopoly over their production could cause severe national security concerns for the United States.
Looking to preempt this dangerous situation, Schumer is pushing for the U.S. Innovation and Competition Act (USICA) to be included in the NDAA, an annual measure to authorize spending for the Department of Defense.
The USICA would authorize about $190 billion in new spending to increase U.S. competitiveness in research and development of technology, as well as $52 billion to increase U.S. microchip production.
“Developing a robust, talented, and homegrown workforce, particularly in the fields of STEM, is critical to the success of the United States innovation economy,” the bill reads.
The $52 billion investment in domestic chip production would go toward a new initiative titled “Creating Helpful Incentives to Produce Semiconductors” (CHIPS) program, which would offer significant incentives to produce and buy U.S.-made microchips.
The USICA was introduced in the Senate in April 2021 and was passed in a bipartisan 68–32 vote in the Senate in June. But since then, the bill has languished in the House with no vote.
As Congress prepares to vote on the newest iteration of the NDAA, Schumer is making a strong push for the USICA to be merged into the larger bill, which had been set for a Senate floor vote on Nov. 17.
“The chip shortage is not some abstract issue—it’s impacting the daily lives of Americans,” Schumer argued. “Cars, refrigerators, and other household appliances require chips. Supply shortages mean Americans are left waiting a long time for these essentials.”
Sen. Mark Kelly (D-Ariz.) joined Schumer in pushing for the legislation.
The bill has “sat idle” in the House, Kelly said, adding, “There is no more time to waste on this.”
But some in his Senate caucus aren’t happy with the bill.
Progressive Sen. Bernie Sanders (I-Vt.) on Nov. 16 called the USICA “corporate welfare, with no strings attached, for a handful of extremely profitable microchip companies.”
House Majority Leader Steny Hoyer (D-Md.) recommended that the USICA be considered by the House separately to allow the House and Senate to hammer out an agreement on the legislation before wrapping it into the NDAA.
The bill does have an important ally in President Joe Biden and his administration.
In the past, Biden has called for a $50 billion investment in the U.S. semiconductor industry. Originally, Biden hoped the plan would be included in the $1.2 trillion infrastructure bill. Though that bill has been passed without funding for the microchip industry, his administration continues to support the effort.
In an interview with Reuters, U.S. Commerce Secretary Gina Raimondo said that a major investment in U.S. microchip production “has to happen by the end of this year. It’s essential.”
It isn’t clear how many Republicans will vote for the NDAA in its current form, despite the party’s broad support for military funding. For conservative Republicans, the bill contains several distasteful elements.
For example, the NDAA would allow women to be drafted, would allow for service members to lose their right to possess a firearm under red flag provisions, and would require that service members be trained in areas such as “equity” and climate change issues.
Moreover, the NDAA doesn’t address the controversial Afghanistan withdrawal, for which Republicans have blamed Secretary of Defense Lloyd Austin and Joint Chiefs of Staff Chairman Gen. Mark Milley. Noting this absence, Republicans have promised to put forward several Afghanistan-related amendments before the bill is passed.
With Republican support for the larger bill uncertain and Sanders’s reservations toward the USICA, the push to revitalize the U.S. microchip industry may face difficulties moving forward.
