President Joe Biden wrapped up a campaign swing through San Diego County Friday at satellite Internet provider Viasat — touting his administration’s work to stimulate more semiconductor manufacturing in the U.S.
In a low-key, mostly non-partisan speech to Viasat employees and local Democrat elected officials, Biden focused on his administration’s economic accomplishments, specifically the $52 billion CHIPS and Science Act that garnered bipartisan support in Congress.
“We need these chips to build most everything,” said Biden. “Instead of relying on chips that are made overseas, which can be delayed because of the pandemic or some other global disruptions, now (companies) are going to be able to have these chips available on the spot. It is a game changer.”
Biden spent Thursday and Friday in California campaigning for U.S. Rep. Mike Levin, who is locked in an increasingly tight race with Republican Brian Maryott for California’s 49th District seat as voters worry about inflation and the direction of the economy.
The president spoke at Carlsbad’s Viasat because about 10 percent of the company’s 7,000-employee workforce are veterans. Viasat also is headquartered in the 49th district and provides satellite in-flight Internet to Air Force One and other government VIP aircraft.
The CHIPS and Science Act funnels $39 billion in subsidies toward semiconductor manufacturing in the U.S., as well as a 25 percent investment tax credit on capital expenditures.
The legislation also earmarks $13.2 billion for technology research and workforce development.
Biden said the legislation will “supercharge our efforts to make semiconductors here in America. It has stimulated an enormous response in private sector investment across the country — more than ever before in such a short time. Hundreds of billions of dollars.”
Micron, a memory chip maker, has announced plans to invest $100 billion in new manufacturing capacity in upstate New York. Intel broke ground on a $20 billion chip plant near Columbus, Ohio. IBM announced a $20 billion investment in developing artificial intelligence and quantum computing technology in New York’s Hudson River Valley. Global Foundries also is eying more than $4 billion in CHIPS Act to expand production, also at a New York facility.
U.S. companies remain leaders in designing complex semiconductors. San Diego’s Qualcomm is the top developer of mobile chips for smartphones. Nvidia develops high-speed graphics processors for video games. Apple has made inroads with high-performance central processors for computers and phones.
But these chip designers don’t manufacture — in part because building complex semiconductor factories costs billions for the intricate lithography and other equipment required to deliver the most leading-edge chips.
Instead, chip designers outsource manufacturing to firms that specialize in making advanced processors, such as Taiwan Semiconductor Manufacturing Corp. (TSMC) and Samsung.
Today, the U.S. produces about 10 percent of the world’s supply of semiconductors — down from 30 percent in the 1990s. Asian manufacturers now produce about 75 percent.
“This is also a national security issue,” said Biden. “Earlier this year I went down to a Lockheed factory in Alabama where they make Javelin missiles. Guess what? They were having trouble supplying the Javelin missiles to Ukraine because they didn’t have the chips. We need semiconductors not only for those Javelins but for other weapons systems that exist today and in the future.”
Viasat designs semiconductors for several products, ranging from satellite Internet gear to National Security Agency-certified encryption devices for the U.S. government, said Craig Miller, head of Viasat’s $1.1 billion government services arm.
It also outsources manufacturing. Expanding the production supply chain in the United States provides the company with security and predictability, he said.
“Also, having a domestic capability lets us work on special projects or classified programs that require a very secure semiconductor,” said Miller. “Not having to off-shore it and having it made in America is really good for us and really good for the country.”
Semiconductor manufacturers globally are expected to plow $150 billion on capital expenditures this year, said industry expert Handel Jones, founder and chief executive of International Business Strategies. So, $39 billion over a few years in the CHIPS Act is a relatively small amount.
“But I think it is a good beginning,” said Jones who also praised the money earmarked for research. “The negative we also see is the significant political issues involved. California senators don’t seem to be engaged. Schumer is very active, so he is getting quite a bit of money for New York.”
Handel was referring to Senate Majority Leader Chuck Schumer, D- New York.
Handel added that San Diego’s Qualcomm could be in the hunt for some CHIPS Act research funding for its work in 6G wireless communications, automotive artificial intelligence and image processing, among other things.
“They are doing some really innovative stuff right now in terms of new generations of technology,” he said.
A Qualcomm spokesperson said the company “applauds the cooperation and perseverance on this legislation, which will help strengthen America’s supply chains and maintain its research & development leadership — core to our nation’s growth, competitiveness and security.”
Biden said the CHIPS Act aims to make up for a deficit in research funding in the U.S. in recent years.
“Decades ago, the United States of America, we used to invest in ourselves,” he said. “America invested 2 percent of its Gross Domestic Product in pure research and science. Over the years we have walked away from that. We invest 0.7 percent of our GDP in science and research.
“Does anybody here think that the future doesn’t rest in major breakthroughs in technology and science?” he asked. “Other countries are closing in fast. The CHIPS and Science Act sets us on a path to move up again.”