Bipartisan Senate Group Said To Plan $52 Billion Bill To Address Chip Shortage

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Bipartisan Senate Group Said To Plan  Billion Bill To Address Chip Shortage

Topline

Hoping to address a worldwide shortage of semiconductors, a bipartisan group of senators is preparing to unveil a $52 billion package that would increase U.S. chip manufacturing and research over the next five years, Reuters reported.

Key Facts

A shortage of microchips has plagued the global economy for months, with the auto industry particularly affected. 

The crunch began after demand spiked for cars, computers and other personal electronic devices last year, while the pandemic forced manufacturing plants to shutter, disrupting the global supply chain.

Sens. Mark Kelly (D-Ariz.), John Cornyn (R-Texas), Mark Warner (R-Va.) and Tom Cotton (R-Ark.) are proposing to spend $39 billion in research and development incentives, along with $10.5 billion for specific programs such as the National Semiconductor Technology Center, and the National Advanced Packaging Manufacturing Program, according to Reuters.

A Cornyn spokesperson, in an email to Forbes, said the senator “is not introducing anything.”

The funding would be part of a $110 billion technology bill the Senate is set to debate next week called the Endless Frontier Act.

Key Background

The Senate bill is part of a bipartisan effort to compete with Chinese manufacturers, a topic that has garnered increased attention during the pandemic. Lawmakers on both sides of the aisle and President Joe Biden have repeatedly warned about U.S reliance on overseas manufacturing as Covid-19 caused shortages of many items. In February, Biden ordered a review of U.S. supply chains and in March he called for $50 billion to help support the chip manufacturing industry. The U.S. currently produces 12% of the world’s semiconductors, down from 37% in 1990, according to Reuters.

Surprising Fact

Due to sustained demand, the global chip shortage could last until 2023, global market research company Forrester told CNBC.

Big Number

$110 billion. That’s how much the chip shortage is expected to cost the auto industry in 2021, according to AlixPartners, a consulting firm. Companies in other industries are beginning to raise alarm about the supply chain woes. “Due to the global semiconductor shortage, we are also experiencing some effects especially around certain set products and display production,” Ben Suh, a Samsung executive, said earlier this month. 

Further Reading 

Exclusive: U.S. senators close to announcing $52 billion chips funding deal – sources (Reuters)

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