Joe Biden seeks big cash infusion into US semiconductor space

Washington: President Joe Biden has appealed for a big cash infusion to America's semiconductor industry amid an acute chip shortage, including in India, and fears that China might overtake the US in this critical technology.

Semiconductor chips function as the brains of cars, medical equipment, household appliances and electronic devices. In January, President Biden touted a $20 billion investment by American technology company Intel to build a semiconductor factory in Ohio to address a global shortage that has been exacerbated by the Covid-19 pandemic and the US-China trade war.

In his first State of the Union address on Tuesday, Biden urged Congress to pass a law that would provide major federal investment in US-based semiconductor production and other manufacturing projects. If that federal money comes through, he said, Intel CEO Pat Gelsinger had personally told him the company would quintuple its Ohio investment to $100 billion, the National Public Radio (NPR) reported. "All they're waiting for is for you to pass this bill," Biden said.

Driven by Washington's desire to retain an edge over China's technological ambitions, the US Investment and Competition Act was passed with rare bipartisan Senate support in June but still needs to be passed by the House of Representatives. It includes full funding for the CHIPS for America Act, which provides $52 billion to catalyse more private sector investments in the semiconductor industry, the Voice of America (VOA) reported.

China is doing everything it can to take over the global market so they can try to outcompete the rest of us, Biden said in January. Seventy-five per cent of the production of the chips takes place in East Asia; 90 per cent of the most advanced chips are made in Taiwan, Biden had said. The semiconductor industry has been roiled by the pandemic and unable to keep up with demand. It takes years to launch a new facility to produce semiconductors, so the problem has lingered. But as countries race to encourage more computer chip production, some experts are growing concerned that the world may be on track for an oversupply of computer chips once all the new facilities come online, the NPR reported.

The myriad disruptions of the pandemic have raised concerns about the vulnerabilities of a supply chain that relies on seamless global cooperation. And the semiconductor market is dominated by producers in Asia, particularly Taiwan. The US share of global semiconductor production has fallen from 37 per cent to 12 per cent over the past 30 years, according to government data.