Commerce Secretary Gina Raimondo discusses the U.S. chip shortage

The Senate on Tuesday moved forward to boost semiconductor production in the U.S. as a chip shortage continues to impact the everyday lives of Americans. It’s part of a broader push to entice chip manufacturers to the U.S. and address national security concerns by ramping up competition with China. Secretary of Commerce Gina Raimondo joins Lisa Desjardins to discuss.

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  • Amna Nawaz:

    The Senate today move forward on legislation that aims to boost semiconductor production here in the U.S.

    It comes as chip shortage is impacting the everyday lives of Americans.

    Lisa Desjardins has that story.

  • Lisa Desjardins:

    Amna, refrigerators, microwaves, computers, mobile phones, cars, military-grade weapons are all things that require semiconductors, or chips, to function.

    The bill making its way through Congress includes at least $52 billion in grants and incentives to design and manufacture chips and a 25 percent tax credit to help build high-tech facilities. The size of the bill could also grow in the next day.

    Even so, this legislation is a scaled-down version of a larger bill aimed at boosting U.S. competitiveness with China.

    For more on this, I'm joined by Secretary of Commerce Gina Raimondo.

    Thank you for joining us.

    There's a fascinating legislative story to this. I know you have been up and back on the Hill many times to try and get this to this point. But let me just ask you the big question. Why is this an important bill? Why is this the priority?

    Gina Raimondo, U.S. Secretary of Commerce: Thank you, Lisa.

    Well, as you just said, every piece of modern medical equipment, every piece of military equipment, everything that needs a computer or that is digital runs on chips. And the reality is, we don't make very many chips in the United States of America.

    In fact, alarmingly, for the most sophisticated chips, we buy almost all of them from Taiwan. We're incredibly dependent on Asia and Asian countries for our supply of chips, including those that are necessary in all of our military equipment.

    And so the United States is at a risk. And we need to make more of these on our shores in the United States, so that we can not only create jobs, but also protect our people.

  • Lisa Desjardins:

    I haven't heard anyone disagree with that, with this idea that there's a need. But some folks say there's other needs as well.

    And we're talking about $50 billion, upwards of that. And that's money that could go to perhaps freezing student loans for a year or needs for the pandemic and disease. Why is this more important than those other things our country needs now?

  • Gina Raimondo:

    Yes.

    Well, first of all, I agree with President Biden that we ought to be able to do all of that. But — so I'm not sure it's an either/or. But here's what I would say about this. This is a core national security imperative.

    Right now, as I said, before, we buy all of these chips of a certain kind from Taiwan. We are heavily dependent on China and Taiwan. We don't make this stuff in America. And yet it is what we need in military equipment, in pacemakers in the hospital, in — in cars.

    You saw, in Lansing, I think GM had to close a facility for a week and put people out of work because they ran out of chips. We just can't do that. We just can't allow ourselves to be overly reliant on these countries in Asia to defend our country. So this is a core national security objective, which will create, by the way, hundreds of thousands of good high-paying manufacturing jobs in the United States of America.

    So it has to happen. It has to happen now. It's just common sense. It is just common sense that we make this investment, so we make chips in America, create jobs, and secure our national security.

  • Lisa Desjardins:

    I want to give you a chance to respond to also some criticism that came from The Wall Street Journal specifically.

    We know that the U.S. has been less of a world supplier of these chips over the past. That's what you're trying to correct here. But The Wall Street Journal says there's some other statistics not mentioned, is that the U.S. leads in chip design already, more than 50 percent of the world — 52 percent of world supply on that, chipmaking equipment, and that seven of the world's 10 largest semiconductor companies are based in the U.S.

    So, given that, and given that some Democrats have said they see this as a corporate giveaway, you mentioned the urgency. Why is it so urgent at this moment?

  • Gina Raimondo:

    So, it's so urgent at this moment because these companies have a choice. And it is true many of them are American companies. But American companies operate all over the world.

    And they have a choice as to where to operate. And if we — and every other country, recently, Germany, France, Singapore, Japan, are offering incentives to those companies to expand in those countries. And so there is no question that these companies will expand and will add jobs and add production.

    The only question is whether they will do it in the United States of America on American soil, which is what we need for our national security, or whether they will do it in another country. And so this is about having these jobs and this secure supply in our country, so that, when we need it, we have it.

  • Lisa Desjardins:

    Some in the manufacturing community, the semiconductor community are saying that too much of this bill would help one company, Intel. How do you respond to that?

  • Gina Raimondo:

    Absolutely not true. Absolutely not true.

    It remains to be seen who will receive these incentives. And it's really any company willing to make a big commitment to invest in the United States, to produce chips is eligible for the incentives. And there will be an open, transparent, competitive process. And everybody ought to apply who's qualified.

  • Lisa Desjardins:

    You come from having run a state, Rhode Island. Now you're having to deal with Congress.

    And Congress doesn't really operate well on deadlines. So, when you say this is needed now, you mean in the next few weeks, right? Are these companies making decisions now about where to give these jobs? Can you help explain that?

  • Gina Raimondo:

    Yes, I literally mean in the next couple of weeks.

    Intel, which is a big semiconductor company, is entertaining offers from Italy and Spain and Germany. They have to make the decision this summer, because they have to start the expansion now. Other companies, it's the same thing. There's an explosion of demand for chips. And these companies are under a lot of pressure from their customers to hurry up and expand, so they can fulfill the orders.

    I would say, tonight, perhaps while we're talking, the Senate is poised to take the first of several votes to take action on this. And I think it's time for Congress to act and get this to the president's desk in the next couple of weeks.

  • Lisa Desjardins:

    You know I'm a national debt nerd.

    (LAUGHTER)

  • Lisa Desjardins:

    So, one thing I have noticed about this bill is, it isn't paid for. This is — this would be adding to the deficit.

    Why is it worth adding to our loans and impacts — including loans from China, in order to boost our competitiveness with China?

  • Gina Raimondo:

    Because this is about national security. We can't put a price on our national security.

    Right now, the United States is denying semiconductors to Russia. And, as a result, their satellites and military equipment are literally falling out of the sky because they don't have semiconductors. That could be us. If Taiwan or China decided not to supply the United States chips, that would be us. We wouldn't be able to defend ourselves.

    So I think $52 billion is really a drop in the bucket, so that we can have peace of mind and national security.

  • Lisa Desjardins:

    One final big picture economic question, inflation, obviously a concern of every American, big concern on Capitol Hill.

    How do you answer those, maybe some on the Hill, who are asking you, this administration didn't get it right on inflation? It's worse than we thought it was. Why should we trust you in other areas like this?

  • Gina Raimondo:

    Look, inflation is a global problem.

    We were chatting before we came on about Europe. Europe is seeing much higher inflation than we are. In certain countries, it's double-digit. This is a global problem driven largely by the pandemic, by Putin's war. And the Fed has taken strong action. And our administration, the president's administration, is doing everything we know how to do to bring down inflation.

    So I think this is apples and oranges. What we're talking about here is getting behind a bipartisan bill to increase domestic productions of a critical technology to secure our future.

    Separately, inflation, which, as I say, is a global issue, and we are going to get that under control.

  • Lisa Desjardins:

    Commerce Secretary Gina Raimondo, we know you have been working on this for a long time. Thank you for talking with us about it.

  • Gina Raimondo:

    Thank you.

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