Commerce Secretary Gina Raimondo Says CHIPS Act Will Spark Something Bigger Than “A Few New Fabs”

By Collin De Boef
Feb 23 2023 |
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Speaking at Georgetown University, Raimondo provided an update on the status of the CHIPS and Science Act, along with a long-term vision for America’s technological — and manufacturing! — leadership.

In the 1960s, the United States found itself in a golden age of technological progress. As scientists and engineers raced to put a man on the moon, many other innovations were being made, marking the beginning of something that came to be known as “Silicon Valley.”

It was during this time that the United States invented the semiconductor, a technological feat that transformed the globe. But as Commerce Secretary Gina Raimondo recalled on Thursday, this innovation didn’t happen in a vacuum.

It was powered by manufacturing, as companies took lessons learned on the factory floor and used them to improve their inventions.

“Tens of thousands of engineers in these companies would make daily incremental innovations in manufacturing techniques, resulting in improved scaling and yield, through expertise that is only possible by producing millions and millions of wafers,” Raimondo said in a speech at Georgetown University. “This relentless pace of fab-to-fab and fab-to-lab innovation became synonymous with America’s tech leadership, doubling our computing capacity every two years. This ecosystem enabled every smartphone, cloud computing service, new car, medical device, and weapons system we use today.”

You probably know what ended up happening to America’s semiconductor industry.

Despite being the country that invented semiconductors, the U.S. now only manufactures only about 12% of the global market share, down from 37% in 1990. That same year, the U.S. manufactured all of the world’s most advanced chips. Now the U.S. manufactures none, Raimondo said.

Moving production overseas, in search of cheap labor and lower costs, has put America in a dangerous position. Some of those vulnerabilities have become apparent thanks to many of the pandemic-induced supply shortages. Raimondo gave an example of this vulnerability in her speech: In 2022, amidst the worldwide auto chips shortage, workers at Ford Motor Company factories in Michigan and Indiana worked a full week only three times.

There are other examples, too. In the wake of the pandemic, medical device makers couldn’t find enough chips to make things like pacemakers and insulin pumps. All the while, China worked hard to grow its semiconductor industry, producing more than 80% of the world’s global capacity for certain chips over the past two years.

“The process of designing and building chips has become the most technical and sophisticated manufacturing process in human history,” Raimondo said. “And the brutal truth is that, without manufacturing strength in the U.S., and the innovation that flows from it, we are at a clear disadvantage in the race to invent and commercialize future generations of technology.”

But vulnerability can spark opportunity.

Raimondo used her speech to share the goals of the CHIPS and Science Act, a new law that will provide tens of billions of dollars in funding for U.S. semiconductor manufacturing.

But as Raimondo outlined, the plan is to think much bigger than “build a few new fabs, and call it a day.” Instead, the Biden administration is aiming is to propel the United States to become the premier place in the world for the making of semiconductors, a central location where chips can be invented, designed, manufactured, and even packaged, all with the world’s most advanced technologies.

“This combination of technological leadership, supplier diversity, and resiliency does not exist anywhere else in the world today,” Raimondo noted.

That incredible environment for semiconductors, combined with a workforce that will be “the gold-standard of the world,” will not only incentivize companies to move to the U.S, it will almost force them to, setting the groundwork for an even larger revitalization of U.S. manufacturing, Raimondo said.

All that starts with the CHIPS Act. The Commerce Department will launch the first application for CHIPS Act funding next week, focused on private sector investments to make semiconductors in America, Raimondo said.

A big goal will be to create at least two new large-scale cluster semiconductor fabs in the United States, which will have the capability to take chips from concept to creation through both manufacturing and research.

“CHIPS for America is intended to spur private capital investment at every stage, not replace it. For us to achieve meet this mission, we need the private sector to invest with us, using our $50 billion of public investment to crowd in at least $500 billion in additional funding for manufacturing and R&D,” Raimondo said. “We’re laying a foundation for American business to do what it does best: innovate, scale, and compete.”  

The need for new manufacturing and R&D facilities also creates many new high-paying American jobs. Raimondo noted that every new fab will “employ thousands and thousands of people in good-paying jobs,” and that doesn’t even account for all of the construction jobs needed to build these massive facilities.

However, the United States currently doesn’t have the trained workforce for this; the loss of manufacturing has also meant a loss of talent. “When you don’t make things anymore, you don’t have the people who know how to make things,” Raimondo said.

Investments in educating a new generation of workers is a quintessential focus of the CHIPS Act, and Raimondo called on private sector companies to work alongside educators to get skills programs up and running.

“We need to train a generation of engineers and scientists who are excited about manufacturing,” Raimondo noted.  

While most Americans may not be engineers or scientists, manufacturing is one of the best places for workers without a college degree to find a good-paying job. Raimondo added that “more than 60% of jobs at semiconductor fabs don’t require a degree… and they pay six figures.”

Labor unions have already pioneered programs designed to reach potential workers to get them into these sorts of jobs. Raimondo pointed to these programs to be the models that ensure we have the workers we so desperately need.

Raimondo reassured that “all of this is very doable.”

AAM President Scott Paul agreed, noting in a statement that while “decades of offshoring have left the U.S. shockingly vulnerable to disruptions,” the country is at an inflection point.

“The CHIPS and Science Act—paired with the Bipartisan Infrastructure Law and Inflation Reduction Act—is a once-in-a-generation opportunity to fuel a manufacturing renaissance,” he said.

For her part, Raimondo seemed confident that the United States will get the job done.

“We can out-compete and out-innovate anyone in the world,” she said.

Click here to read Raimondo’s entire speech, and be sure to check out Scott Paul’s full statement.