Senate passes semiconductor industry bill

The Alliance for Automotive Innovation, which represents most major automakers and some suppliers in the US, commended the Senate bill’s passage and urged the House to follow suit.

“Other countries are taking aggressive steps to get ahead of the United States on semiconductor production. By investing in American-made chips today, our country will be in greater control of its own destiny tomorrow — not to mention less reliant on foreign suppliers and governments ,” alliance CEO John Bozzella said in a statement.

The auto industry has repeatedly called for government intervention to address the persistent global semiconductor shortage that began in 2020. The pandemic-induced supply disruption has forced automakers to cut vehicle production globally and eliminate certain vehicle features.

In June, major automakers and industry suppliers again urged legislation Congress to quickly pass bipartisan competitiveness, including the CHIPS Act.

“There is not a single supply-chain shortage with a greater impact on the US economy than the shortage of automotive-grade semiconductors,” the American Automotive Policy Council, which represents Ford Motor Co., General Motors and Stellantis, said in a statement Monday.

The lack of chips prevented 1.5 million vehicles from being produced in the US last year, according to the alliance, leaving dealerships with lower-than-normal levels of new-vehicle inventory.

Sens. Gary Peters and Debbie Stabenow, both Michigan Democrats, worked to secure the $2 billion incentive fund dedicated to support legacy chip production for critical manufacturing sectors, including the auto industry.

“Dedicated funds to support the domestic production of semiconductor technologies will give the automotive industry — and specifically the automotive supply chain — a greater competitive advantage around the globe,” Julie Fream, CEO of the Original Equipment Suppliers Association, told reporters Tuesday during a virtual press briefing.

But building a semiconductor fabrication plant can take “at least two years,” she noted, so it will take time for supply woes to fully ease.

“This problem only gets bigger as time goes on,” Peters said in a response to a question from Automotive News.

As the auto industry transitions to electric vehicles and adds more automated features and advanced safety technologies, more chips will be needed, he added.

“The demand for chips is increasing every single year, dramatically,” Peters said. “We have to get in front of this problem. … We have to start building these facilities now.”