'Grave national security threat': Congress may give billions to US chip manufacturers to compete with China

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U.S. Secretary of Commerce Gina Raimondo said on Wednesday that lawmakers appear to be moving to carve off $52 billion in semiconductor chips manufacturing subsidies from a larger bill on boosting U.S. competitiveness with China.

"Things seem to be coalescing around the path of chips, or maybe chips plus a thing or two, and getting it done this month," Raimondo told Reuters in a telephone interview. "It seems like that's what Congress is coalescing around."

A smaller bill could also include investment tax credits for semiconductor manufacturing, she said, but emphasized that discussions are very fluid. "That is a good outcome because the worst outcome is getting nothing done by Aug. 4," when Congress leaves for summer recess, she said. "Better to get chips plus a little done than nothing done."

CHINA COULD WIN 'TRUMP CARD' OVER GLOBAL ECONOMY BY TAKING OVER TAIWAN SEMICONDUCTOR MANUFACTURING

Raimondo, Director of National Intelligence Avril Haines and Deputy Defense Secretary Kathleen Hicks are conducting a classified all-senators briefing at 4 p.m. EDT on Wednesday as Democratic lawmakers and the White House make a concerted effort to win approval for chips legislation.

Gina Raimondo, U.S. Secretary of Commerce, said that lawmakers may approve a $52 billion subsidy to U.S. semiconductor chip manufacturers. (Sarah Silbiger/Pool via Reuters/File Photo)

"This is a grave national security threat," Raimondo told Reuters. "If you don't get this done by August 4 there is irreparable harm to the United States economy and the United States military operations. So you have to at least get this done now."

The Senate legislation, passed in June 2021, included $52 billion for chip subsidies and authorized another $200 billion to boost U.S. scientific and technological innovation to compete with China. The House version, passed in February, is similar but nearly 3,000 pages long and includes a number of trade proposals.

Senate Republican Leader Mitch McConnell said on Tuesday he saw two paths forward: the House could pass the Senate bill or another option is to "spin off the chips part of it and pass it."

Raimondo cited McConnell's comments and noted that House Speaker Nancy Pelosi on Wednesday had ruled out passing the Senate bill. "I think that Congress understands the real sense of urgency to get the chips portion done," Raimondo said.

SEMICONDUCTOR CHIP SHORTAGE CHALLENGES SEVERAL INDUSTRIES

A persistent shortage of chips has disrupted the automotive and electronics industries, forcing some companies to scale back production. Many companies think the shortage will last at least until late 2023 if not longer. Lawmakers warn some major investments in new U.S. chip production could be jeopardized without action from Congress.

After the interview, Raimondo said in a statement sent by her office that "CHIPS only is an option and we’d prefer a more robust bill, but everything is on the table."