Commerce Secretary Gina Raimondo warned Wednesday that the country’s current dependence on foreign computer chip manufacturing puts the country at risk of recession if it ever ends. His comments came as Congress nears key votes on a bill to fund US semiconductor manufacturing,
While many computer chips are designed in the U.S. by companies like Intel, Raimondo told CNBC’s Sara Eisen on Wednesday’s “Closing Bell” that the location of production is just as important.
“If you allow yourself to think about a scenario where the U.S. no longer has access to chips that are currently being made in Taiwan, that’s a scary scenario,” Raimondo said. “It’s a deep and immediate recession. It’s the inability to defend ourselves by making military equipment. We have to do it in America. We need a manufacturing base that produces these chips, at least in sufficient quantities, here on our shores, because otherwise we’re just too dependent on other countries. “
The more than $50 billion CHIPS Act would help support the creation of semiconductor manufacturing plants in the United States.
Computer chips are used in many Internet-connected devices, from smartphones to medical technology and cars.
The bill, which cleared a procedural hurdle in the Senate on Tuesday but must still pass both chambers, has support on both sides of the aisle, although some lawmakers have questioned the need to subsidize companies that have engaged in share buybacks. The bill now includes a ban on using the money for buybacks or dividends.
The semiconductor industry has lobbied hard for the bill’s passage as Intel warned its proposed manufacturing plant in Ohio, in which it said it would invest an initial $20 billion, could be delayed by a congressional shutdown.
Raimondo addressed criticism of the heavy funding of this one industry, calling semiconductors “a cornerstone technology needed to support every other innovation-driven industry.”
He added that the country’s heavy reliance on foreign chip production, which he said accounts for 90% of the high-end chips purchased from Taiwan, poses a national security risk.
He said it’s also important to ensure that companies are incentivized to expand chip production in the U.S., rather than lure them to invest in other countries that may offer attractive advantages.
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