US chip makers lobby for billions

The American semiconductor industry is gearing up for a lobbying push to obtain billions of dollars in federal funding.

Chip makers are pushing for federal funds

The American semiconductor industry is gearing up for a lobbying push to obtain billions of dollars in federal funding for factory building and research to keep the US ahead of China and other countries that heavily subsidise their chip industries.

The $US37bn ($55.4bn) in proposals from the Semiconductor Industry Association includes subsidies for the construction of a new chip factory, aid for states seeking to attract semiconductor investment and an increase in research funding, according to a draft of the proposals viewed by The Wall Street Journal.

The push comes as the administration and congress try to grapple with twin challenges: reducing US dependence on Asia for technology products and competing effectively with China. The pandemic has deepened those concerns and re-energised a debate about the role the government should play in encouraging innovation.

The growing tension with China “has moved the dynamic toward accepting a national industrial strategy”, said Robert Atkinson, president of the Information Technology & Innovation Foundation, an industry think tank. “In the old days, it was about protecting steel. The consensus now is much more about helping sunrise industries.”

Industry officials consider expected legislation with coronavirus relief funding, the annual National Defence Authorisation Act and some emerging technology bills as potential vehicles for the proposals.

While it is unlikely that the SIA’s recommendations will be accepted without modifications, some influential politicians and administration officials, including Secretary of Commerce Wilbur Ross and Secretary of State Mike Pompeo, are examining ways to help the industry.

“The Trump administration is committed to ensuring the United States has a secure, vibrant, and internationally competitive hi-tech ecosystem, supported by domestic chip production,” Mr Ross said.

A State Department spokeswoman echoed that support, saying the department was “working closely with congress and industry to ensure that the future of the semiconductor industry remains in the United States”.

The SIA’s proposal is related to the concern that the US is losing its edge to countries that have been more generous with incentives, especially China. Computer chips underpin some of the most important commercial and defence technologies of the future, including 5G networking and artificial intelligence, both areas where the Trump administration wants to stay a step ahead of global rivals.

China is expected nearly to double its share of global chip production capacity to about 28 per cent by 2030, according to SIA estimates, although that includes production by foreign companies based in China.

Additional reporting: Kate O’Keeffe