Raimondo seeks to rally US behind $52 billion chip program

FILE - Commerce Secretary Gina Raimondo speaks before President Joe Biden to African leaders gathered for the U.S.-Africa Leaders Summit Dec. 14, 2022, in Washington. The government's $52 billion investment to develop advanced computer chips has become a rare source of bipartisan agreement. Senate Republican leader Mitch McConnell voted for it because of its importance for national security. But Raimondo says the U.S. needs a whole-of-society effort for the investments to succeed. (AP Photo/Patrick Semansky, File) (Patrick Semansky, Copyright 2022 The Associated Press. All rights reserved.)

WASHINGTON – Commerce Secretary Gina Raimondo on Thursday called on the country to unite around a $52 billion effort to restore the U.S. as the world leader in advanced computer chips, saying it will require training of tens of thousands of workers.

“The research, innovation and manufacturing sparked by this law will enable us to be the technological superpower, securing our economic and national security future for the next generation,” Raimondo said in a speech at Georgetown University.

The government sees the funding as a launching pad to create two major semiconductor clusters inside the U.S. featuring a network of factories, research laboratories and other infrastructure.

But fulfilling that vision will be a multi-year challenge that requires job training and figuring out scientific breakthroughs to lower the cost of producing advanced chips. There is a level of cooperation that is needed among the federal government, state governments, local officials, CEOs, universities and school districts — the kind of joint effort that could be challenging in an era of divided politics.

The Biden administration is hopeful it can surmount political hurdles as Democrats and Republicans alike back the initiative.

President Joe Biden signed the CHIPS and Science Act into law last August on the promise that it would spur factory groundbreakings. It is also designed to ensure a steady supply of the chips needed for autos, appliances, electronics, toys, toothbrushes and weapons systems.

The U.S. — despite being the birthplace of chips — has ceded ground to producers in South Korea and Taiwan, creating an economic and national security challenge if shipping lanes are blocked.

Chips are integrated circuits that are embedded in a semiconductor, a material — notably silicon — that can manage the flow of electric current. The terms “chip” and “semiconductor” are often used interchangeably.

Starting next week, the application process will begin for semiconductor firms seeking to qualify for $39 billion in government backing to help fund their expansion. The administration expects the $39 billion for factories will generate 10 times that, at a minimum, in private-sector investment.

The potential benefits come from the spillover effects of computer chip production jobs that typically pay over $100,000, leading to additional economic activity and business formation. That has Raimondo saying that colleges and universities must triple the number of graduates in semiconductor-related fields, otherwise there will be a shortage of workers.

“This is math, people, this isn't a political agenda,” Raimondo said in her speech.

The new law also contains $11 billion to fund a research partnership between universities, companies and national laboratories — all with the mission of increasing a chip’s processing power and lowering the cost of semiconductors so that there are buyers in a global market.

“We have to bring down the cost — big time — which means innovation, innovation, innovation,” Raimondo told The Associated Press in an interview.

To succeed, she said, the U.S. needs a whole-of-society effort. It’s the kind of mobilization akin to World War II or the space race that grandparents talk about to younger generations, a make-or-break moment for the nation with the world’s largest economy and military.

“There have been times in history,” Raimondo said in the interview, “where a president used the pursuit of a goal, a technological goal, like putting a man on the moon, like leading the world in nuclear technology, to catalyze the whole country to do their part in achieving that goal.”

Critics note that the real work is with administering the law and monitoring how the funds are used, warning that simply spending money does not guarantee the desired results and could create economic distortions.

“The CHIPS Act is a work in progress to say the least,” said Anthony Kim, a research fellow at the conservative Heritage Foundation. “Spending more is not and cannot be a solution, particularly in the current economy environment where inflationary pressures are still abundant.”

The promise of government support is spurring construction plans, though it’s still early in a process that will take years. Major chip companies such as TSMC, Intel, Micron, IBM and others have so far committed to roughly $200 billion for investments in new plants, according to the White House. Last week, Texas Instruments announced an $11 billion investment to expand its semiconductor production in Utah.

The moves are long-term in nature. There is a relative glut of chips available right now, after a shortage as the world economy began to emerge from the coronavirus pandemic in 2021.