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U.S. Senate Bill In Works To Boost Chipmaking With $30B: Report

‘There needs to be more capacity in the semiconductor market. Demand is only going to continue to grow as all these different sectors are putting more pressure on semiconductor capacity that exists today. So they need to have that long term, not just for PCs, but for the auto industry and other markets,’ an IT distribution exec says.

The U.S. Senate is reportedly considering a proposal to boost domestic chipmaking with $30 billion in funding for manufacturing and research.

Reuters reported Thursday that the funding would be part of a package for previously approved measures aimed at boosting the U.S. tech sector and staving off China’s growing influence. The news agency cited an unnamed congressional source, but the report also cited remarks last month by Sen. Majority Leader Chuck Schumer (D-N.Y.), who directed lawmakers to craft the legislation.

[Related: Nvidia-Arm Deal Faces Concerns From Microsoft, Google, Qualcomm: Reports]

The report of the legislation comes after several top semiconductor industry executives urged President Joe Biden in February to rekindle domestic chip manufacturing with “substantial funding” to improve U.S. competitiveness and chip supplies. Biden signed an executive order last month calling for an extensive review of semiconductor supply chains to address chip shortages.

The bill, which is expected to reach a full vote in April, could use the proposed $30 billion to fund measures for semiconductor manufacturing and research that were previously approved in the CHIPs for America Act as part of the 2021 defense bill, Reuters reported, citing Schumer’s office.

The legislation would be modeled after a bill proposed by Schumer and Sen. Todd Young (R-Ind.) last year that included $100 billion in funding for semiconductors, quantum computing, AI and other key tech areas, according to Reuters.

Kent Tibbils, vice president of marketing at ASI, a Fremont, Calif.-based IT distributor, said such a measure could help alleviate chip shortages as multiple industries ramp up their use of semiconductors.

“There needs to be more capacity in the semiconductor market,” he said. “Demand is only going to continue to grow as all these different sectors are putting more pressure on semiconductor capacity that exists today. So they need to have that long term, not just for PCs, but for the auto industry and other markets, where semiconductors are playing a bigger and bigger role.”

Tibbils said the move could also help create new jobs and lower U.S. reliance on other countries for semiconductor supply chains. In addition, he added, expanded chip manufacturing capacity could go hand in hand with next-generation semiconductor technologies.

Randy Copeland, CEO of Velocity Micro, a Richmond, Va.-based PC system builder for the enthusiast and commercial markets, said he would likely be opposed to the U.S. spending $30 billion on domestic chipmaking, unless it involved tax breaks, because he thinks the issues facing the semiconductor industry will be resolved before such funding could have a real impact.

“It takes years to get fabs built. It takes years to get fabs and sub-vendors in there, so I don’t think this is necessarily going to be a solution to anything,” he said. “I think the market will fix this better.”

Copeland acknowledged the argument made by the Semiconductor Industry Association that U.S. chipmaking has fallen behind due to domestic investments largely being flat while foreign governments have provided significant funding and incentives to chip manufacturers overseas.

But he countered that some matters, like Intel’s manufacturing issues that have resulted in product delays, can’t be fixed with government funding.

“Intel’s got plenty of fabs in the U.S. that are probably under capacity these days, but they can’t just turn around and make the competitive product that people want,” Copeland said. “It’s not as simple as that.”

Copeland said he would be more in favor of the federal government lowering the barriers for creating new manufacturing plants by helping with land deals or lowering the corporate tax rate.

“Nobody wants to talk about cutting taxes, but we have to be realistic,” he said. “When we say other countries are assisting, that’s what they’re talking about.”

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