Michigan members of Congress push leaders for chip funding

Washington — Nearly two-thirds of Michigan's congressional delegation urged House and Senate leadership to retain and quickly pass $52 billion in funding for domestic semiconductor production Thursday. 

The push comes two weeks after Speaker of the House Nancy Pelosi and Senate Majority Leader Chuck Schumer agreed to move ahead on a bill aimed at increasing U.S. competition with China, which includes $2 billion set aside for production of "mature" chips used in the auto industry. The bill passed the Senate in June but had stalled in the House. 

Now, the two chambers will send the bill through a conferencing process to resolve any remaining policy disagreements. Michigan's members of Congress insist that if something is chopped, it shouldn't be the chips funding. 

"In Michigan, the semiconductor shortage has idled production at auto plants, forced automakers to cut back shifts for employees, and driven up car prices for working families," Democratic Sens. Debbie Stabenow of Lansing and Gary Peters of Bloomfield Hills wrote Thursday in a letter to Pelosi and Schumer. The pair authored the provision setting aside $2 billion for mature chips.

"The long-term growth of the automotive industry is dependent on a healthy supply of semiconductors, but too often these vital components are made in foreign countries."

The global semiconductor shortage is entering its second year, with manufacturing industry executives warning they expect supplies to continue to be constrained in the near term — perhaps even into 2023.

The shortage has been especially challenging for global automakers, hampering production worldwide, leaving dealership lots bare, pushing up prices and limiting choices for consumers. It's also prompted thousands of autoworker layoffs and furloughs. The shortage could cost the industry an estimated $210 billion in revenue globally this year, according to AlixPartners LLP, a global consultancy tracking the shortage.

In a separate letter signed by Democratic Reps. Debbie Dingell of Dearborn, Dan Kildee of Flint Township, Rashida Tlaib of Detroit, Brenda Lawrence of Southfield, Andy Levin of Bloomfield Township, Haley Stevens of Rochester Hills and Elissa Slotkin of Holly and Republican Reps. Fred Upton of St. Joseph and Peter Meijer of Grand Rapids Township, the delegation argued "inaction is not an option any longer" and that the consequences of further delay "could be dire."

"It is clear, across political parties that this is a bipartisan issue we must face together," the House members wrote. "If we are to keep the United States the center of the global automotive industry and ensure our workforce remains strong, we need to act fast to mitigate the harms of this semiconductor supply shortage now and, more importantly, in the long-term."

While the funding is not likely to ease the strain on automakers in the short term — it takes a few years to get a chip fab up and running — it is part of a national movement to strengthen supply chains after the global pandemic illustrated how reliant the U.S. is on other countries for crucial goods, particularly its chief economic competitor, China. 

Around three-quarters of global semiconductor capacity is in Asia, primarily in Taiwan. The U.S. is home to just 13% of the world's chip production capacity. 

As policymakers consider the legislation to ramp up production, businesses are racing ahead. Chip manufacturers are expected to spend $146 billion on expanding production this year, according to market researcher Gartner Inc.

Though some new projects are slated to begin in the U.S. — such as a recently-announced Samsung chip fab in Texas — most of that spending will be concentrated in Asia.