Vote looms on bill that has high stakes for Texas tech sector

Lawyers and politicians say the window is closing to pass legislation aimed at increasing semiconductor production in major centers, including Texas, as the US Senate prepares to vote on a bill on which industry advocates, businesses and politicians have been working for over a year.

On a Monday call with reporters from Texas and Idaho, U.S. Commerce Secretary Gina Raimondo called on Congress to pass a bill to encourage companies to expand and build manufacturing facilities. semiconductors in the United States.

The White House push comes amid a global shortage of semiconductors, the computer chips that power everything from your laptop to your car,

Raimondo said Texas and Idaho are well positioned to see expansions and new facilities from semiconductor companies, but said the bill could make or break Texas’s ability to continue to grow its industry. semiconductors.

“If Congress passes the Chips Act, Idaho and Texas are the states with the most to gain, but also the most to lose. We know that these companies in your states currently have offers from other countries. to expand there. And we know they’ll accept those offers if Congress doesn’t pass it,” Raimondo said, and stressed that increasing U.S. semiconductor manufacturing is critical to economic security, job creation and national security.

‘Exciting and challenging:’ Taylor braces for boom as $17 billion Samsung factory moves forward

Senate Majority Leader Chuck Schumer said a vote will take place in the US Senate on Tuesday. The Senate is expected to vote on a package of slimmed-down bills to help bolster America’s computer chip industry. The House would also have to pass the bill before it can go to the president’s desk. If passed, the legislation could authorize grants, tax credits and other financial incentives for semiconductor makers who build factories in the United States, including Texas.

The new bill is a scaled-down version of a bill the Senate passed in June 2021 but never became law, which included $52 billion for chip subsidies and an additional $200 billion for stimulate scientific and technological innovation in the United States. The House never picked up last year’s bill and instead passed a similar but different version in February, which also included trade proposals.

The original Senate bill, the Helpful Semiconductor Production Incentives Creation Act (CHIPS), was drafted by Sen. John Cornyn, R-Texas, along with Democratic Sen. Mark Kelly and Mark Warner and Republican Tom Cotton. Last year, representatives from tech giants Samsung, Dell Technologies, Infineon, NXP Semiconductors, BAE Systems and AMD met with Cornyn at Samsung’s Austin facility to discuss the need for solutions to supply chain issues. and lobbying for passage of the bill.

On Monday afternoon, Cornyn said he was “cautiously optimistic” that a bill would pass that includes funding and tax incentives for chipmakers. Cornyn said the legislation he hopes to vote on would narrow the cost gap between manufacturing in the United States and other countries.

“If we don’t make a decision quickly, and I’m talking about the next few weeks, we can say goodbye to these manufacturing plants in places like Texas and Ohio, Arizona and other states across the country that could benefit from this construction and the high-paying jobs that come with it,” Cornyn said.

Even without firm plans, Samsung seeks new incentive offers for Austin and Taylor sites

Raimondo said the United States was too dependent on foreign countries for chips, and South Korea, Japan, Germany, France and other countries were aggressively offering incentives to chipmakers to they unload their installations.

“We’re late. We buy almost all of our fancy chips from Taiwan, and it’s a scary place,” Raimondo said. “Other countries have recently passed their own version of the chip law and they are now every day talking to US semiconductor companies and offering them incentives to expand into those countries. .. There is a window closing and we will lose to other countries if we don’t move now.”

Cornyn said the coronavirus pandemic has exposed supply chain vulnerabilities in semiconductor manufacturing. Currently, most semiconductors are manufactured overseas, primarily in Asia, a trend that has increased in recent years. Last year, the Semiconductor Industry Association, an advocacy group, estimated that the $52 billion federal incentive program would strengthen the nation’s semiconductor industrial infrastructure and could help create 10 new factories in the United States. United and create 42,000 semiconductor-related jobs.

“If we’re going to bring some of that manufacturing capacity back to the United States to protect against potential blockages – whether from military conflict, pandemic, or natural disaster – we’re going to have to find a way to entice these manufacturing facilities to locate here in the United States,” Cornyn said.

House and Senate bills included trade provisions, research funding and calls for the development of a regional tech hub, but lawmakers have yet to come up with a compromise bill capable of passage with 60 votes in the Senate. A new bill is expected to include $52 billion in financial and research incentives and a semiconductor investment tax credit. The new bill probably won’t be as helpful for companies in the semiconductor industry that don’t produce their own chips, like AMD or Silicon Labs.

In the United States, Texas is one of the largest producers of semiconductors, exporting billions of dollars worth of chips every year. In central Texas, semiconductor companies account for about a quarter of all manufacturing output in the region, according to the Austin Regional Manufacturers Association.

Semiconductors are already a mainstay of Central Texas’ economy, but the region is poised to see big expansions in manufacturing capacity. Samsung announced last year that it planned to build a $17 billion chip factory in Taylor. NXP Semiconductors is considering a $2.6 billion expansion in Austin that would create up to 800 jobs, technology company Applied Materials said it is considering Hutto for a $2.4 billion research and development center, and chipmaker Infineon Technologies said it was considering Austin for $700 million. expansion.

Ed Latson, executive director of the Austin Regional Manufacturers Association, predicted more announcements could come after the bill is passed by companies waiting to see the results.

“This is an extremely important bill for Central Texas. It will inject billions of dollars into our local economy,” Latson said. “It’s going to mean jobs for small and medium-sized businesses as well as large presences, and it’s going to boost America’s competitiveness, so we’re hopeful that will pass.”

Laston said the inaction and the length of time it has taken for a deal has raised some concerns from the companies.

“This is such a slam dunk bill that it’s a wonder it hasn’t passed yet. There’s real bipartisan support. It’s recognized that we’re flawed in this country and in our capacity in semiconductors. It addresses key strategic issues. It creates jobs. It’s just a win in so many different areas,” Latson said.

Matthew Bryson, an analyst at Wedbush Securities, said passage of the bill and government funding are important for the biggest companies in the sector. He predicted that the projects could be cut if the bill does not pass.

“If you’re going to compete for a Fab build, you have to offer big money or people will go where they get help building fabs,” Bryson said. “It’s the only way to be competitive.”