Class 8 truck manufacturers struggled to meet demand in 2021 due to a global semiconductor shortage. The lion’s share of high-tech chips is made overseas, leaving the U.S. vulnerable to the whims of foreign entities. In an effort to curb reliance on semiconductors made abroad, the U.S. Senate put partisan politics aside and passed a measure that provides $52 billion to companies willing to establish domestic production, with more government spending expected later. The Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act is expected to promptly reach the White House for Pres. Biden’s signature.
“If you allow yourself to think about a scenario where the United States no longer had access to the chips currently being made in Taiwan, it’s a scary scenario,” Commerce Secretary Gina Raimondo reportedly said. “It’s a deep and immediate recession. It’s an inability to protect ourselves by making military equipment. We need to make this in America. We need a manufacturing base that produces these chips, at least enough of these chips, here on our shores because otherwise, we’ll just be too dependent on other countries.”
The cost of building a semiconductor plant reportedly runs upwards of $20 billion and typically takes 3-5 years. North American truck manufacturers will likely remain at risk of shortages and supply chain bottlenecks for years. That’s why the Commerce Secretary is urging immediate action.
“Semiconductor companies need to get ‘concrete in the ground’ by this fall to meet this increased demand in the years ahead,” Commerce Secretary Raimondo and Defense Secretary Lloyd Austin reportedly wrote in a letter to Congress. “CEOs of firms all along the supply chain have made clear that the industry is deciding where to invest now.”
And there’s no guarantee the high-tech factories will necessarily produce the products needed for Class 8 vehicles. Passenger vehicle makers and a host of other sectors ground to a virtual standstill during the peak of the supply chain disruption. China threatens a Taiwan invasion and continues to shutter plants when Covid outbreaks occur. On the homefront, containers at U.S. ports are piling up again. Still, the CHIPS for America Acts is the first major effort to resolve the semiconductor issue.
According to a summary by the Senate Commerce Committee, $39 billion provides direct financial assistance for construction and plant expansions. Another $11 billion program is expected to fund partnerships for research, development, and workforce training. Lastly, $2 billion would be used to move technological advancements into military applications.
In other good news, the U.S. Senate appears to put protections in place to safeguard against misuse of taxpayer funds. Those who gain access to the money cannot use portions for stock buybacks or capital distributions. Organizations and individuals linked to the Chinese military are banned from the program.
Sources:
https://www.ttnews.com/articles/chipmakers-get-52-billion-senate-bill-big-win-biden
Thanks for sharing!