Semiconductor shortage is wake-up call, Commerce Secretary Gina Raimondo says
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WASHINGTON — Nine months ago, Gina Raimondo, then the Rhode Island governor, was in Providence fighting with the state’s teachers' unions to open its public schools. She succeeded. Schools opened for in-person instruction, even as they remained closed in many other blue states through 2020, into 2021.
Today, Raimondo is in Washington, D.C. Having been confirmed in early March as the commerce secretary, she is working to open semiconductor factories in the United States. A recent global shortage of semiconductors — tiny chips that serve key components in virtually all electronic equipment — has crippled broad swaths of the American economy, the automotive sector in particular.
Schools and semiconductors may have little in common, but Raimondo has a practical, gotta-get-it-done approach suited to both issues. Last fall, she cited science to rebut the unions’ arguments in favor of remote learning. Those arguments won in many parts of California and New York, and relegated children to months of remote learning.
Not in Rhode Island, whose liberalism is more hard-bitten and practical than that of its wealthier competitors. Donald Trump didn’t win the state in either 2016 or 2020, but he nevertheless has loyal (if limited) support in a state with a proud past in manufacturing and an uncertain future in the 21st century economy.
"We have to get it done right — and quickly," Raimondo told Yahoo News earlier this week. “We want these companies to be making this stuff in America."
President Biden wants to invest $52 billion to bring semiconductor production back to the United States from East Asia, where it fled along with so much other industry. In 1990, 37 percent of the world’s semiconductors were made in the United States; today, only 12 percent are. Global demand caught manufacturers off guard, leading to recent shortages that observers say could last until the end of 2021.
“In search of cheap labor, we offshored so much manufacturing,” said Raimondo. “And now we wake up one day, vulnerable, because we don't make this stuff in America."
The most sophisticated chips are made almost entirely in Taiwan. China is also investing heavily, as perhaps only a centrally planned economy can do.
“We recognize that we are never going to out-China China," a person involved in the semiconductor industry told Yahoo News, speaking on the condition that his name not be used. The industry goal is to increase capacity in the United States enough to lessen impacts of global supply chain disruptions like the one now taking place.
The Semiconductor Industry Association estimates that $52 billion in federal incentives and research initiatives would lead to the creation of 19 factories and as many as 42,000 jobs, adding $24.6 billion annually to the American economy.
Raimondo is at the center of the fight, which became more complex this week. Earlier this month, the Senate appropriated $52 billion for the semiconductor industry in a bill passed last month intended to make the U.S. more competitive with China in the technology sector.
The House passed its own version of a science funding bill this week, without the $52 billion the Senate had allotted. The two chambers will engage in deliberations on semiconductor funding and other issues.
“I am not that worried about it,” a Senate aide involved in the issue told Yahoo News, speaking on the condition of anonymity. He said House Democrats had made clear that their science-related funding priorities were different. Negotiations were always expected, the aide said, describing those forthcoming talks as “a pretty normal process."
New to Washington, Raimondo doesn’t have many existing relationships with Democrats on Capitol Hill. In addition to the microchip issue, she has been tasked with pushing for the president’s infrastructure plan, one of two Harvard-educated Rhodes Scholars involved in the effort (the other is Transportation Secretary Pete Buttigieg).
Raimondo and Biden weren’t close before he asked her to join his Cabinet, but both come from working-class Catholic families rooted in Northeastern states somewhat removed from the region’s centers of power. The daughter of a watchmaker, Raimondo knows the promise of well-paying factory jobs, especially those that don’t require advanced degrees.
But there are challenges too. Rhode Island has the highest bladder cancer rate in the nation, an abnormally high incidence that many epidemiologists believe is related to the state’s legacy of manufacturing.
Semiconductor manufacturing uses a bevy of chemical solvents and metals, and semiconductor “clean rooms” where women work have given rise to troubling clusters of birth defects, miscarriages and breast cancers.
“Technology has improved substantially,” Raimondo said. Both she and the Semiconductor Industry Association argue that it will be up to semiconductor companies to make the case to the federal government that they’re deserving of some share of the $52 billion, should that funding become reality.
“The companies will have to be committed to ensuring that they have good labor practices, good health and safety practices and good environmental practices,” Raimondo told Yahoo News.
Even if the sector is critical, progressives will be on alert to anything that looks like a corporate giveaway. "There will be strings attached,” the secretary said bluntly. “We are going to hold employers to standards.”
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