U.S. chip funding could spur 7-10 new plants, officials say

She said she expected states will compete for federal funding for chip facilities and that the Commerce department would have a transparent process for awarding funding.

Raimondo was speaking Monday at an event outside a Micron Technology chip factory.

A global shortage of seminconductor chips, caused by factors including a rise in demand for electronic devices during the pandemic, has affected automakers and other industries. Automakers including General Motors, Ford Motor Co. and Volkswagen have cut production this year due to the shortage.

U.S. Sen. Mark Warner, a Democrat, said at Monday’s event he thought the funds could result in “seven to 10” new fabrication plants.

“This is not going to solve this overnight,” Warner said. “It will take years for the Commerce Department to make these investments.”

Last week, Senate Democratic Leader Chuck Schumer unveiled revised bipartisan legislation to spend $52 billion for U.S. semiconductor chip production and research over five years.

Supporters of funding note the United States had a 37 percent share of semiconductors and microelectronics production in 1990. Today just 12 percent of semiconductors are manufactured in the U.S.

The bill includes $39 billion in production and R&D incentives and $10.5 billion to implement programs including the National Semiconductor Technology Center, National Advanced Packaging Manufacturing Program and other R&D programs.

Sen. John Cornyn, a Texas Republican who also took part in the joint event, has filed an amendment to remove prevailing wage provisions from the bill and said he wanted a vote on his amendment, saying the wage issue was jeopardizing Republican support.

“I don’t expect this is going to stop our achieving what we want to achieve,” Cornyn told Reuters, referring to the wage issue. “It’s important but I think getting the Chips for America Act passed is essential.”

He said China had left the United States no option but to make such investments. “This is a vulnerability we must fix.”

Last month, Ford warned the chip shortage might slash its second-quarter production by half, costing it about $2.5 billion and about 1.1 million units of lost production in 2021.

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