(Bloomberg) — U.S. Commerce Secretary Gina Raimondo said legislation to spur domestic semiconductor manufacturing needs rules to prevent funds from going toward production in China but deferred to Congress on the details of such provisions.
“Congress will decide what, if any, legislative guardrails they want to put on this, versus if they want to defer on that and let Commerce handle it in the regulations,” Raimondo said Thursday during an interview with Bloomberg reporters and editors in New York. “But it’s something we have to grapple with. The intention is to protect ourselves from China.”
The administration and Congress “will figure out the guardrails,” she said, but it’s too soon to talk about specifics given that negotiations on the final bill are ongoing.
The Biden administration recently spurned a plan by Intel Corp. to increase production in China over security concerns, dealing a setback to an idea pitched as a fix for U.S. chip shortages, Bloomberg News reported last month.
Intel, the world’s largest chipmaker, had proposed using a factory in Chengdu, China, to manufacture silicon wafers, people familiar with the matter said. Company executives proposed the China plan as a way to help ease a global supply crunch of semiconductors. At the same time, Intel is seeking funds from the Chips Act to expand its footprint in the U.S.
Following deliberations with the Biden team, Intel has no plans to add the production in China at the moment, a person familiar with the decision said.
Possible Template
The scenario showcased a potential template for other companies that plan to apply for both American taxpayer dollar-funded grants to expand in the U.S. in addition to increasing their manufacturing in China. Until now, the administration has not said whether it would support rules that come attached to the grant money.
Raimondo said “the whole point” of the $52 billion program is to provide companies an alternative to China.
The Commerce chief said she has frequently discussed this with companies and her message is always the same: “Long-term national security interests matter more than short-term profits. So let’s think carefully about the decisions we make.”
“American companies have a role to play in helping us collectively advance our national security interests,” Raimondo said.
The consequences for the U.S. economy and national security would be “devastating” if there’s a significant delay in passing the chips legislation, she said.
“If it can’t be done before Christmas, it has to be done in January because the consequences of not facing this problem long run are really quite devastating to our economy and our national security,” she said Thursday in a Bloomberg Television interview with Emily Wilkins and Joe Mathieu.
Legislative Limbo
Despite bipartisan support, the legislation has been in limbo for months. In November, Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi announced an agreement to craft a version of the bill that could pass in both chambers. So far, that has not yielded any new proposals.
Texas Republican Senator John Cornyn said Wednesday that the timing will likely slip to February.
“We shouldn’t wait till February,” Raimondo said. “There’s no reason to.”
The Commerce Department recently asked companies in the semiconductor supply chain for information to detect bottlenecks and potential hoarding of supplies.
Her team is “pretty pleased” with the information provided by the roughly 150 firms but it’s still evaluating the responses and what conclusions can be drawn from them. It’s not yet clear how her agency will use the data to address a lack of transparency and supply disruptions for semiconductor makers and users.
Many companies initially were reluctant to share the requested data but some now are thanking her “for making us do this,” she said of her conversations with executives, because the process provided firms “with valuable information to help us work through the bottlenecks and choke points.”
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