Biden officials to brief lawmakers on semiconductor supply chain risks

Biden administration officials will brief lawmakers Wednesday on the “profound” potential economic consequences from vulnerabilities in domestic semiconductor production and urge Congress to pass a sweeping competition bill to bolster the supply chain.

The classified briefing will be led by White House national security adviser Jake Sullivan and Deputy Defense Secretary Kathleen Hicks. Commerce Secretary Gina Raimondo was supposed to attend, but she tested positive for COVID-19 earlier Wednesday morning.

“This is, we’ve determined, important to provide greater visibility into what we are seeing from intelligence channels, as well as from economic moves by key competitors, most notably China, around the escalating vulnerabilities we have from the semiconductors issue,” Brian Deese, director of the National Economic Council, told reporters at a Christian Science Monitor event.

Attendees at the briefing will include more than a dozen members of Congress, Deese said, including Sens. John Cornyn (R-Texas), Todd Young (R-Ind.) and Rob Portman (R-Ohio).

“The piece that we will be underscoring in this briefing is the degree of forward vulnerability that we have around a supply chain which has largely moved overseas,” Deese said. “And so, today, we produce 12 percent of global semiconductors in the United States, but we produce none of the advanced, leading-edge semiconductors. So we are 100 percent vulnerable on those supply chains for those advanced semiconductors.

“And what we are seeing is increasingly aggressive efforts by China and other countries to try to build their own resilience in semiconductor manufacturing, which if not addressed effectively by the United Staes, would increase our vulnerability and our economic risk,” he continued.

Semiconductor chip shortages have been a key point of concern for the Biden administration as the global supply chain has been hampered by the COVID-19 pandemic. The shortage has affected multiple industries, most prominently the auto sector, which uses the chips for power steering and computer systems.

Deese said best estimates have determined the lack of availability of semiconductors took a full percentage point off of gross domestic product in 2021, and he warned the consequences for the economy could be even worse without congressional action.

“The risks are profound,” he said. “We’re talking on the order of multiples, multiples of the negative impact we saw in 2021 to our economy.”

The administration is pushing for Congress to reconcile the two versions of competition legislation that separately passed the House and Senate.

The House in February passed The America Competes Act, which includes $52 billion to incentivize domestic semiconductor chip production as well as $45 billion in grants and loans through the Department of Commerce to help support and enhance manufacturing facilities to strengthen domestic supply chains.

The bill received just one Republican “yes” vote, from Rep. Adam Kinzinger (Ill.).

The Senate passed its version of a competition bill in June with the support of 18 GOP senators.