WASHINGTON — Republican senators are accusing the Biden administration of using $39 billion meant to build computer chip factories to further “woke” ideas such as requiring some recipients to offer child care and encouraging the use of union labor.
The administration has countered that these elements of the funding guidelines announced Tuesday will improve the likelihood of attracting companies to build the semiconductor factories and people to work there – a key challenge that could determine the program’s success. It sees the guidelines as a starting point for working with companies to ensure value for taxpayers.
President Biden speaks during an event to support legislation that would encourage domestic manufacturing and strengthen supply chains for computer chips in 2022, in the South Court Auditorium on the White House campus in Washington. Patrick Semansky/Associated Press, file
The tension is an example of the partisan mistrust that can arise in Washington even on an agenda item that lawmakers from both parties say is vital for U.S. national security. Republicans say the administration, in implementing the law, is trying to squeeze in priorities that please the Democratic base. They also argue that the guidelines will increase the cost of constructing semiconductor plants and will poison any sense of ongoing trust.
“What President Biden is doing by jamming woke and green agenda items into legislation we pass is making it harder for him to ever get legislation passed again,” said Sen. Mitt Romney, R-Utah, who voted for the law.
But in the grand scheme, administration officials say, the guidelines can help to address two fundamental challenges to the government’s plans to transform the United States into the world leader in producing advanced computer chips: The companies need skilled labor and they need innovations that can reduce production costs.
If the investments are going to succeed, Commerce Secretary Gina Raimondo has said, the companies must find and train tens of thousands of workers, from welders to electrical engineers. More importantly, the industry needs scientific breakthroughs to halve the cost of making chips so the U.S. can compete with Asia, Raimondo told The Associated Press in an interview before the guidelines came out.
“Innovation happens when you go to solve big fat problems like cutting the cost of chip production in half,” Raimondo said. “That’s what we have to do.”
The money for the factories comes from the CHIPS and Science Act that President Biden signed into law last August. It includes $11 billion for research, in addition to the $39 billion for building advanced computer chip factories. Tax incentives bring the total investment to $52 billion.
Chips are integrated circuits that are embedded in a semiconductor, a material – notably silicon – that can manage the flow of electric current. The terms “chip” and “semiconductor” are often used interchangeably. Computer chips are used in everything from autos to toys to advanced weapons, making them as fundamental for the digital era as iron and steel were in the industrial age.
Administration officials said the factories could have an easier time attracting workers if child care is provided to parents at an “affordable” rate by companies that would receive $150 million or more in government backing. Similarly, companies seeking the money are given a preference if they use labor agreements for construction, a boost for building trade unions. The White House, in a 2022 executive order, said that can ensure projects are completed on time.
An administration official, speaking on condition of anonymity to discuss private conversations, said no prospective applicant has complained about the child care provision. The official added that TSMC and Samsung – two possible applicants – already provide child care at their facilities in Taiwan and South Korea, respectively.
Researchers at the Center for Strategic and International Studies, a think tank focused on national security, described the child care provisions as necessary for the “fabs,” the chip industry’s term for factories.
“It is not, as some have wrongly argued, an issue of social policy,” wrote Sujai Shivakumar and Charles Wessner, both at CSIS. “It is a pragmatic move, clearly aligned with the nation’s security interests, to grow the workforce necessary to get the fabs built and producing the chips on which our country runs.”
There are roughly 360,000 jobs in semiconductor production, according to the Labor Department. Announced projects tied to the possibility of government support could add 200,000 more jobs, including 36,000 directly tied to computer chips, according to a report by the Semiconductor Industry Association.
That same report noted that the U.S. leads in terms of designing chips and the equipment to manufacture them. But more than 70% of the chips produced globally come from China, Japan, Taiwan and South Korea – an economic and military weakness for the U.S.
Sen. Thom Tillis, R-N.C., said the mandates for accessing government support would raise the cost of completing the factories planned by Intel, Micron and Wolfspeed, which plans to make silicon wafers in his state.
“What we’re beginning to do is discount the value of the investment that we’re making,” Tillis said. “I think that what we’re doing is social engineering.”
Support for the computer chips legislation was bipartisan. Seventeen Republican senators joined with Democrats to back the bill. Twenty-four House Republicans voted for the legislation.
Raimondo, when asked if the law could get tripped up by politics, said: “You always worry. Washington’s unpredictable. And politics is crazy.”
Sen. Todd Young, R-Ind., said the practical impact of the guidance is limited because companies likely would have offered child care and relied on some unions anyway. But Young said the administration’s messaging is not going over so well with colleagues.
Young was instrumental in generating Republican support for the bill and worked closely with Senate Majority Leader Chuck Schumer in crafting it. The idea behind the proposed investments is “consistent with our free market principles,” he said. “But the communications exercise of the administration as related to these matters is complicating that.”
Sen. John Cornyn, R-Texas, who voted for the bill, said he has exchanged text messages with Raimondo since the guidance came out and told her “that when the administration does things like that, it really undermines our ability to work together in a bipartisan basis to pass legislation.”
Cornyn said he realizes that Raimondo “doesn’t call all the shots,” but he hopes she’s sending the message to the White House about Republican frustration. He acknowledged that he is still evaluating the guidance and trying to figure out “what difference does it make.”
Sen. Lindsey Graham, R-S.C., said he voted to “give us the capabilities that we don’t have,” not the “union agenda” that he sees embedded in the application process.
Graham said Republicans have recourse to make sure the administration knows their objections, possibly taking the squabble well beyond computer chips: “Hold every nominee, make life miserable,” he said.
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