In celebrating a $20 billion investment by Intel in a new chip plant in Ohio, President Biden sought to jump-start a stalled part of his economic and national security agenda: a huge federal investment in manufacturing, research and development in technologies that China is also seeking to dominate.
Mr. Biden moved to push for another bill, one that has bipartisan support, because the Build Back Better Act and legislation to protect voting rights weremoribund.
He has lost a lot of time since the Senate passed the China competition bill, which would devote nearly a quarter of a trillion dollars to domestic chip manufacturing, artificial intelligence research, robotics, quantum computing and a range of other technologies. The bill is the most expansive in U.S. history.
Mr. Biden said that America was in a competition with China. He chose the words deliberately, knowing that Chinese officials have protested the use of the word "competition" because it has echoes of a Cold War-like contest.
China will be told to play by the same rules as everyone else. We are going to invest whatever it takes in America, in American innovation, in American communities, in American workers.
The initiative would free American weapons systems from relying on foreign parts and solve supply chain disruptions for a long time, he argued.
After months in which he rarely mentioned the China competition bill so that he did not lose focus on other elements of his agenda, Mr. Biden said on Friday that its passage was needed for the sake of our economic competitiveness and our national security.
Despite being the leader in chip design and research, we barely produce 10 percent of the computer chips. Right now, we don't have the ability to make the most advanced chips.
According to some estimates, the United States' growth last year was cut in half because of shortages of chips, which are needed to power everything from cars and washing machines to medical equipment and electrical grids.
The Biden administration has billed Intel's new investment near Columbus, Ohio, as a partial remedy for supply chain disruptions that have led to global chip shortages and spurred inflation, but the project would do little to resolve any economic problems in the short term. The first phase of Intel's $100 billion investment in Ohio is not expected to be up and running for at least a decade.
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The Biden administration has billed Intel's new investment as a partial remedy for supply chain disruptions.
In addition to providing positive headlines for a troubled White House, Intel's plans may help build momentum for a key element of Mr. Biden's agenda that was set aside as lawmakers contended with ambitious bills on infrastructure, social spending and voting rights. Nancy Pelosi said on Thursday that the House committees would soon begin negotiations with the Senate to move the China competition legislation to a vote.
When the bill passed the Senate by a wide margin, it was sold as a jobs plan and as a way to avoid leaving the United States perilously dependent on its biggest adversary.
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China is not yet a major producer of the world's most advanced chips, and it does not have the ability to make Semiconductor with the smallest circuits because the United States and its allies have blocked it from purchasing equipment needed to make those chips.
Beijing is pouring a lot of money into the sector, and it is also flexing its military reach over Taiwan, one of the largest manufacturers of advanced chips. According to the Semiconductor Industry Association, China accounted for 9 percent of global chip sales in 2020. Five years ago that was only 3.8 percent of global chip sales.
At the World Economic Forum this week, Ursula von der Leyen, the president of the European Commission, announced plans for Europe to propose its own legislation early next month to promote the development of the Semiconductor industry and to anticipate shortages.
John Neuffer, the chief executive of the Semiconductor Industry Association, said Japan, South Korea, India and other countries were also introducing their own incentives in a bid to attract a strategically important industry.
Mr. Neuffer said that the clock was running. We are not working in a vacuum. This is a global industry.
The China competition bill is being pushed by Mr. Biden amid growing frustration in corporate circles with his economic policies toward the country. The administration hasn't said whether it will lift the tariffs or press Beijing for more trade concessions.
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The problem was caused by the Pandemic. The global supply chain is in turmoil. The outbreak of Covid-19 caused an economic downturn, mass layoffs and a halt to production. Here is what happened next.
A decrease in shipping. With fewer goods being made and fewer people with paychecks to spend at the start of the Pandemic, manufacturers and shipping companies assumed demand would drop sharply. Demand for some items would surge as a result of that mistake.
There was a spike in demand for protective gear. In early 2020 the planet needed surgical masks and gowns. Most of the goods were made in China. Cargo vessels began delivering gear around the globe as Chinese factories began ramping up production.
There was a shipping container shortage. The containers were emptied in many parts of the world. China, where factories would begin pumping out goods in record volumes, needed more containers than any other country.
There was increased demand for durable goods. Spending shifted from eating out to online purchases as a result of the Pandemic.
Strained supply chains. Factory goods overwhelmed the U.S. ports. The cost of shipping a container from Shanghai to Los Angeles went up tenfold because of swelling orders.
The Senate passed the U.S. innovation and competition act, which contains a number of provisions intended to encourage the U.S. economy to take on China.
The chip funding has broad bipartisan support and could be passed into law as soon as the next few months, but the question is whether other measures in the package will sink its prospects. Some House Democrats may object to an investigation into foreign digital trade practices in the Senate bill.
The global shortage of chips and the inflation that has accompanied it have spurred more interest in the United States. Whether Congress approves billions of dollars in new funding and how the Biden administration distributes it will likely determine whether an investment like Intel's is a one-time occurrence or a trend.
Taiwan Semiconductor Manufacturing Company, Texas Instruments, and Micron Technology have all announced expansions in the United States. GlobalFoundries has committed to a second factory in New York, after promising a $17 billion facility in Texas.
East Asia is still the center of gravity for the global industry. The United States used to be the largest producer of chips in the world, but has shifted production to Asian factories.
As a result of the Pandemic-related shutdowns, companies around the world were short of workers and raw materials, leading to shortages and prices for a variety of goods. Almost every major carmaker had to curtail production last year.
One of the main causes of inflation in the US is the shortage of chips, and it's a key gripe among American voters as the elections approach. The price of used cars went up 37 percent in December, helping to drive inflation to a 40-year high.
In an effort to ease the chip shortages, the Biden administration has convened gatherings with Semiconductor executives, established a global alert system to identify shortages and requested vast amounts of information from chip companies. Some of that information is expected to be made public by the Commerce Department.
Gina Raimondo, the commerce secretary, said in a statement on Friday that Intel's investment was a win for the company, for American manufacturing and for American consumers who can look forward to lower prices as we bring home production of the semiconductors that keep our economy running.
The administration has little control over short-term trends in the industry because of the long lead times needed to build facilities, analysts say.
Mr. Neuffer said his industry appreciated the attention the White House was giving to the sector. There is only so much government can do. The market is just going to have to work through these supply chains.
Catie gave reporting.
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