Biden Administration Moves to Secure U.S. Semiconductor Supply Chain

The strategic importance of foundational semiconductors to U.S. national and economic security cannot be overstated. These vital components are integral to a wide range of industries, including automotive, medical, defense, and infrastructure, underpinning the functionality of everyday goods and critical systems.

Concerns have been mounting over the People's Republic of China's (PRC) role in the semiconductor market. The PRC's non-market strategies and industrial targeting have stirred fears of increased supply chain dependencies and competitive harm to U.S. semiconductor interests.

In response, the Biden-Harris Administration is stepping up efforts to shield American enterprises from these challenges while bolstering the domestic semiconductor industry.

Key Initiatives by the Biden-Harris Administration

Initiating a Section 301 Investigation

The U.S. Trade Representative's Office is launching a Section 301 investigation to scrutinize the PRC's aspirations in the foundational semiconductor realm and its economic repercussions on the U.S. This probe will also assess the PRC’s influence on materials like silicon carbide substrates crucial for semiconductor fabrication.

This examination will encompass the entry of PRC semiconductors into the U.S. market, often as parts of finished products, and their integration into sectors such as defense, automotive, and telecommunications.

Investing in Domestic Semiconductor Manufacturing

Efforts to expand domestic chip production are a focal point of the Biden-Harris Administration, supported by the CHIPS and Science Act which designates over $2 billion for semiconductor projects. This investment aims to rejuvenate American economic leadership and industrial capabilities.

Significant investments include partnerships with companies such as Texas Instruments, GlobalFoundries, and Bosch. These initiatives are further incentivized by the 48D Advanced Manufacturing Investment Credit, offering a 25% tax credit for semiconductor manufacturing endeavors.

Enhancing Federal Supply Chain Security

To secure supply chains, especially for military applications, federal procurement practices are being reformed. New regulations under the James M. Inhofe National Defense Authorization Act prohibit purchasing products containing chips from specified Chinese entities.

The administration is also seeking industry input through a Request for Information, aimed at enhancing the federal reliance on domestically manufactured semiconductors.

Fostering Global Semiconductor Supply Chain Cooperation

The U.S. is collaborating with global allies to enhance semiconductor supply chain resilience and address concerns over China's market practices. Initiatives include partnerships under the CHIPS and Science Act's International Technology Security and Innovation Fund and agreements like the Indo-Pacific Economic Framework for Prosperity (IPEF).

Through the G7, the U.S. is advocating for economic resilience and the mitigation of market distortions, establishing measures to monitor and counteract detrimental practices in the semiconductor sector.

The administration remains committed to working with international partners to sustain strong alliances and a fair trade system that benefits both workers and businesses.