President Joe Biden wants lawmakers to finish legislation to increase semiconductor and wireless tech manufacturing in the U.S.
Two proposed U.S. technology competition bills aim to strengthen the supply chain by reducing reliance on overseas manufacturing. The legislation will also boost government investment in tech education as well as research and development.
Last year, the Senate passed its bipartisan $250 billion competition bill, the U.S. Innovation and Competition Act of 2021. The House passed its response to the Senate’s bill, the America Competes Act of 2022, in January. Now, the two bodies are working to create one bill to send to the president to be signed into law. In his State of the Union address, Biden called on legislators to pass a final bill.
“To compete for the best jobs of the future, we also need to level the playing field with China and other competitors,” Biden said. “That’s why it’s so important to pass the bipartisan innovation act sitting in Congress that will make record investments in emerging technologies and American manufacturing.”
The final U.S. competition bill will be the first major technology bill in more than 30 years since the Omnibus Trade and Competitiveness Act of 1988, said Rob Atkinson, founder and president of the Information Technology and Innovation Foundation. Congress has long neglected investment in U.S. science and technology innovation, he said.
The legislation will funnel billions into semiconductor manufacturing, wireless technology, and a new directorate for technology and innovation in the U.S. This new group will focus on researching and developing technologies such as AI, autonomous systems and quantum computing.
Growing concern over China and its investment in emerging technologies spurred a bipartisan group of lawmakers including Sen. Chuck Schumer, D-N.Y., and Sen. Todd Young, R-Ind., to take action to improve U.S. competitiveness, Atkinson said. The COVID-19 pandemic and global chip shortage also shed light on challenges facing the U.S. supply chain. Most semiconductor manufacturing takes place overseas, he said.
“It’s certainly on the right track, and it suggests a sea change in how Washington thinks about these issues,” Atkinson said of the U.S. technology competition bills. “That’s all to the good. The question is, is it enough?”
The semiconductor industry will be one of the biggest beneficiaries of this legislation, Atkinson said. Though the House and Senate bills differ, there is agreement around semiconductor funding.
“There’s a general consensus in Washington that absent doing something serious there, we’re going to continue to lose production capabilities overseas, and that would lead to potential serious vulnerabilities, including in national security,” he said.
Both the House and Senate bills allocate $52 billion through the Chips Act to spur the production of semiconductors in the U.S. Atkinson said the federal push for semiconductor funding is “absolutely needed” because few companies would build fabrication facilities for semiconductors without government incentives.
Indeed, Intel announced last month plans to invest $20 billion in constructing two new semiconductor chip manufacturing factories in Ohio. The company could eventually invest up to $100 billion in the semiconductor factories, which are expected to be completed by 2025.
However, the extent to which Intel is able to build its chipmaking facilities depends heavily on federal funding through the Chips Act, included in both the House and Senate competition bills, said Keyvan Esfarjani, Intel’s senior vice president of manufacturing, supply chain and operations, in a news release.
Another significant beneficiary of a final U.S. technology competition bill would be communications companies, said Glenn O’Donnell, vice president and research director at research and advisory firm Forrester Research.
“There is no company in the U.S. that makes the core equipment for 5G, and that freaks some people out in Washington — and it should freak them out,” O’Donnell said.
The House bill appropriates $1.5 billion to the Public Wireless Supply Chain Innovation Fund for deploying Open Radio Access Network, or Open RAN, equipment in an effort to “spur movement toward open architecture, software-based wireless technologies,” according to a fact sheet about the bill. The Senate bill also allocates $1.5 billion for innovation in 5G and 6G technologies.
Atkinson said there is a “clear commitment” in Congress to move away from dependencies on Huawei, a Chinese multinational technology company that produces telecommunications equipment and other electronics.
Where things might get dicey between the House and the Senate as they work on a final bill is over funding to support a new technology directorate.
The Senate bill wants to create an entirely new technology division at the National Science Foundation (NSF), which would keep its focus on emerging tech. Atkinson said the idea is to focus on those technologies that countries like China have also identified as areas to pursue, such as quantum computing, but to also involve the tech industry more than a traditional NSF model.
The House bill almost eliminates that idea as it provides less funding over time to a separate, robust tech directorate, Atkinson said. While the Senate wants to provide $9 billion annually to the new technology directorate, the House wants to provide $3 billion annually. Considering the differences in funding, Atkinson expects a major fight over it.
It may take a while before the House and Senate agree on a final bill to send to the president, Atkinson said. He said the final bill will likely result in the House and Senate meeting in the middle on some issues, such as the technology directorate funding.
O’Donnell said another struggle for lawmakers is balancing the need to invest in U.S. competitiveness with funding large tech companies.
“The government has to dance this dance delicately,” O’Donnell said. “Because the last thing they want to do is be seen as handing out big fat checks to big tech, because most of the tech companies are just swimming in money. You don’t want to be giving them handouts because, frankly, they’re not struggling.”
Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.
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