Congress is ‘moving too slowly’ on semiconductor supply crunch, Commerce Secretary says

When Commerce Secretary Gina Raimondo appeared on Yahoo Finance in January, she said movement was afoot on one of her signature issues: a bill to spend over $50 billion on semiconductor manufacturing. “There is urgency,” she said at the time, adding that “the fundamentals of this bill have broad bipartisan support.”

But over 3 months later — and without much progress on the issue from Capitol Hill — her patience was running thin in a follow-up appearance.

“I think they’re moving too slowly,” she said of lawmakers this week in a conversation with Yahoo Finance Live. “The country needs it, the military needs it, and I think it’s time for them to step on the gas and do what’s right for America.”

The bill she was discussing is currently held up in Congressional negotiations. The Senate first passed the US Innovation and Competition Act (USICA) nearly a year ago and the House followed up with a similar bill in February.

There are headline provisions that are the same in both bills, including billions for the semiconductor industry and money for scientific research. But key differences remain over other issues, including philosophical divides on trade and US-China relations.

WASHINGTON, DC - APRIL 27: US Secretary of Commerce Gina Raimondo arrives to testify at the US Capitol on April 27, 2022 in Washington, DC.  Commerce Secretary Gina Raimondo tested at the Senate Commerce Committee hearing on the Commerce Department's FY 2023 budget.  (Photo by Tasos Katopodis/Getty Images)

Secretary of Commerce Gina Raimondo before a Congressional hearing in April. (Tasos Katopodis/Getty Images)

President Biden has also been prodding Congress to complete the bill for months, saying the legislation would help alleviate current bottlenecks and ease inflation — such as in the auto industry — and boost America’s position against competitors like China.

‘At the top of every CEO’s list’

“The Commerce Department is taking the lead role in this,” Raimondo said of the ongoing negotiations. “We hear from businesses every day. I would say this is at the top of every CEO’s list that I talk to, and particularly the defense contractors I might add.”

Defense contractors like Lockheed Martin (LMT) are particularly concerned about the shortage as many of the weapons they are racing to produce to ship to Ukraine are semiconductor dependent.

On Tuesday, President Biden traveled to Alabama to highlight some of the work being done to keep Ukraine armed with things like Javelin anti-tank missiles.

During an appearance at a Lockheed Martin facility in Alabama, he noted that “each of the Javelins you produce includes more than 200 semiconductors.”

The US has sent over 5,500 of the shoulder-fired weapons systems, which are designed to stop tanks and have reportedly been effective against Russia’s fleet. Officials at Lockheed Martin told to Yahoo Finance that more than half of the chips in each system are used in the Javelin’s launching system, with the remainder located inside the missile itself.

“This isn’t just about inflation, actually it’s primarily about our national security,” Raimondo says.

Service members of the Ukrainian Armed Forces fire a Javelin anti-tank missile during drills at a training ground in an unknown location in Ukraine, in this handout picture released February 18, 2022. Ukrainian Joint Forces Operation Press Service/Handout via REUTERS ATTENTION EDITORS - THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY.

Service members of the Ukrainian Armed Forces fire a Javelin anti-tank missile during drills in Ukraine, in this handout picture released February 18, 2022. (Ukrainian Joint Forces Operation Press Service/Handout via REUTERS)

Chip shortage is ‘life-threatening for Americans’

The US role in semiconductor manufacturing has fallen from nearly 40% in 1990 to 12% today, according to a recent report from the Semiconductor Industry Association. The situation is even worse with the world’s most advanced logic semiconductors, 100% of which were manufactured overseas in 2019.

Raimondo also brought up a recent conversation with CEOs in the medical device field. She reports that these companies also can’t get chips and in some cases are paying 500 times per chip what they were paying a year ago.

She recently hosted CEOs at the White House to highlight the role semiconductors play across the US economy from home appliances to smart phones to power generation.

In the case of medical devices, Raimondo says there’s no time to waste. ‘That’s life-threatening for Americans, and that’s why I don’t have a lot of patience for Congress foot-dragging, because there are lives at stake and we have a solution that’s before them.”

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

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