Senate Democratic Majority Leader Chuck Schumer in the Capitol this Tuesday night ELIZABETH FRANTZ (R)
One of the first symptoms of the seizure of global supply chains was the temporary shutdown of several auto plants in the US in early 2021 due to semiconductor shortages. Ultimately, this global congestion not only contributed to fueling inflation, but also demonstrated strategic dependence on China or Taiwan, the main producers of these vital microprocessors used in the manufacture of cars, mobile phones or medical robots. This Wednesday, the Senate reduced reliance on China with a bill to subsidize US microchip manufacturing with $52 billion in subsidies and tax breaks.
By 64 votes in favour, 34 against, the bill passed the litmus test of the Senate, in which Democratic and Republican seats are tied and in the hands of the Senate whether to pass or defeat initiatives approved by the House of Representatives. When the draft is final, the text is put to the vote in both chambers of Congress.
The Joe Biden administration has paid particular attention to the provision of semiconductors, even invoking Cold War-era national security laws. Microchipping at home is key to countering China’s power but also dependence on other countries like Taiwan and South Korea, where a truck strike halted the distribution of goods for several weeks and slowed global supply again.
The fluid supply of microchips showed warning signs in the latter part of 2020 as a result of the restrictions and shutdown of the economy due to the pandemic; In addition, there were successive waves caused by new variants of the corona virus. Trade tensions between China and the US, although milder than during Donald Trump’s presidency, have also helped microprocessor production and supplies become one of the key battles in the ongoing trade war.
According to Taiwanese consulting firm TrendForce, the market demand of the global semiconductor industry will reach $89.7 billion in 2021, according to EFE agency data.
In short, the initiative of the bipartisan group of senators seeks to increase US competitiveness vis-à-vis China, but also sheds light on the possibility of an understanding between the two parties on issues of national interest. One of them, for example, is the fight against the monopolistic practices of big technology, which has almost unwavering support from Democrats and Republicans. In the case of microchips, the lack of a political agreement would have led to the reversal of key investments in industry and technology that were on the brink of being scrapped in recent weeks after a year of intense negotiations.
Thanks to the bipartisan agreement, the Senate is now poised to move ahead with a broader package that would see $250 billion in research and development investments in critical technologies, with the goal of focusing spending on once-thriving and now-thriving industrial hubs Scene of exclusion and abandonment. Led by a Democratic senator, Majority Leader Chuck Schumer, and another Republican, Todd Young, representing Indiana, the legislation’s goal to revitalize communities emptied by resettlement is a key hotbed of votes for Donald Trump in 2016.
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