Developing Next Generation Technology for Innovation (U.S. Senate Committee on Commerce, Science, and Transportation)

Hearing	Developing Next Generation Technology for Innovation
Committee	U.S. Senate Committee on Commerce, Science, and Transportation
Date	March 23, 2022

 

Hearing Takeaways:

• The Current Global Semiconductor Shortage: The hearing largely focused on the current global semiconductor shortage and its impact on the U.S. economy and U.S. national security. Committee Members and the hearing’s witnesses discussed how this shortage was causing products to become more expensive (most notably cars) and attributed this shortage to the COVID-19 pandemic and the ensuing supply chain disruptions. They highlighted how all digital products ran on semiconductors and stated that semiconductors were foundational to innovative technologies, including artificial intelligence (AI), 5G, autonomous vehicles (AVs), electric vehicles (EVs), and internet-of-things (IoT). Of note, the hearing’s witnesses representing semiconductor companies (Intel, Micron, and Lam Research) discussed how their companies were making investments in the U.S. in order to bolster their domestic semiconductor production capabilities.
  • Asia’s Dominance in Global Semiconductor Manufacturing: Committee Members and the hearing’s witnesses raised concerns regarding how 80 percent of semiconductors were now built in Asia while only 12 percent of semiconductors were currently built in the U.S. They noted that Asian countries had gradually taken away semiconductor manufacturing market share from the U.S. over several decades. They attributed Asia’s current dominance in semiconductor manufacturing to Asian government policies that supported domestic semiconductor industries, which made it cheaper to build semiconductors in those countries. Mr. Mehrotra further noted how the U.S. only accounted for 2 percent of the world’s semiconductor memory manufacturing. He indicated that the remaining 98 percent of this manufacturing was done in Asia.
  • Production of Advanced Semiconductor Chips: Committee Members and the hearing’s witnesses expressed particular interest in bolstering the U.S.’s advanced semiconductor manufacturing capabilities given the importance of advanced semiconductor chips in innovative technologies. Mr. Gelsinger noted that only the U.S., South Korea, and Taiwan could currently manufacture advanced semiconductor chips.
  • Lack of Semiconductor Packaging, Assembly, and Testing within the U.S.: Sen. Jerry Moran (R-KS) noted how the U.S. accounted for less than 5 percent of the world’s semiconductor packaging, assembly, and testing. He expressed interest in bolstering this activity within the U.S.
  • Impact of the Semiconductor Shortage on the Automobile Sector: A key area of concern during the hearing was the current semiconductor shortage’s impact on the automobile sector, which was leading to production stoppages, vehicle shortages, and vehicle prices to spike. Mr. Feight highlighted how these automobile sector challenges were leading to even greater supply chain issues given how the majority of the U.S.’s freight was transported via trucks. Sen. Jacky Rosen (D-NV) further raised concerns how these vehicle shortages were impacting the availability of rental cares (which in turn impacted tourism-dependent economies). Committee Members and the hearing’s witnesses also highlighted how the U.S. need leading-edge semiconductors in order to support EVs, zero emissions vehicles, and AVs.
  • Increased Potential for Counterfeit Semiconductors and Security Vulnerabilities: Full Committee Chairman Maria Cantwell (D-WA) noted how counterfeiters were trying to exploit the current semiconductor shortage through introducing fake semiconductor chips into the market, which posed risks to the U.S.’s critical infrastructure and defense systems. She further stated that the current semiconductor shortage was hampering the U.S.’s efforts to remove foreign manufactured telecommunication devices that could be compromised with “backdoors” from foreign governments.
• Policy Proposals to Address the Global Semiconductor Shortage: The hearing focused on policy efforts to address the current semiconductor shortage. In particular, Committee Members and the hearing’s witnesses focused on the upcoming Conference Committee to reconcile the U.S. House of Representatives-passed America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (COMPETES) Act of 2022 and the U.S.-Senate passed United States Innovation and Competition Act of 2021 (USICA). Both of these pieces of legislation include proposals meant to spur domestic semiconductor production.
  • Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act Funding: The National Defense Authorization Act (NDAA) for Fiscal Year 2021 included the CHIPS for America Act, which authorized investments and incentives to support U.S. semiconductor manufacturing, research and development (R&D), and supply chain security. Both USICA and the America COMPETES Act would provide funding to implement the CHIPS for America Act. Several Committee Members and the hearing’s witnesses contended that CHIPS for America Act funding would be critical for supporting the U.S.’s domestic semiconductor manufacturing efforts and for enabling the U.S. semiconductor industry to compete globally (especially in light of how other countries currently provide incentives and subsidies to their domestic semiconductor industries). However, Sen. Ron Johnson (R-WI) questioned the wisdom of providing government funding to private semiconductor companies and suggested that the U.S. should instead work to challenge the policies of foreign countries on the grounds that the policies constituted unfair trade practices. Sen. Rick Scott (R-FL) also raised concerns that this funding would not produce a profit for taxpayers. Mr. Gelsinger contended that the legislation’s funding of semiconductor production would support job creation and economic activity, as well as bolster the U.S.’s national security.
  • The Facilitating American-Built Semiconductors (FABS) Act: Both the America COMPETES Act and USICA would also establish a semiconductor investment tax credit (ITC), which Committee Members and the hearing’s witnesses argued would help to spur domestic semiconductor manufacturing.
  • The Importance of Public-Private Partnerships: Committee Members and the hearing’s witnesses also expressed interest in promoting public-private partnerships to bolster the U.S.’s semiconductor manufacturing. Mr. Gelsinger and Mr. Feight highlighted how Intel and PACCAR were engaged in such partnerships with government research agencies and local colleges and universities. Mr. Archer expressed support for the Microelectronics Research for Energy Innovation Act, which he explained would streamline coordination and better deploy federal resources, including the U.S. National Laboratories, to sustain research partnerships. 
• Additional Semiconductor Policy Issues and Concerns: Committee Members and the hearing’s witnesses discussed policy issues and concerns impacting the semiconductor space in addition to the current global semiconductor shortage.
  • Workforce Development and Diversity Initiatives: Several Committee Members and the hearing’s witnesses expressed interest in policy efforts to support semiconductor workforce development and diversity. The hearing’s witnesses highlighted how their companies partnered with community colleges, schools, and historically black colleges and universities (HBCUs) in order to support workforce training and to develop talent from underrepresented groups (such as women and minorities). Mr. Gelsinger and Mr. Archer also advocated for immigration reforms to increase the potential semiconductor workforce. Sen. Warnock further discussed his proposal to establish an Office of Opportunity and Inclusion at the U.S. Department of Commerce in order to develop standards that would help expand opportunities in the semiconductor industry for traditionally underrepresented groups. 
  • Concerns Regarding the Climate Change and Environmental Impacts of Semiconductor Production: Sen. Ed Markey (D-MA) expressed interest in the environmental impacts of semiconductor chip manufacturing in terms of greenhouse gas emissions and water usage. He called on semiconductor companies to commit to achieving net zero greenhouse gas emissions by 2050.
  • Concerns Regarding the Stock Repurchase Patterns of U.S. Semiconductor Companies: Sen. Tammy Baldwin (D-WI) called for assurances from the witnesses that they would not use the funding from the CHIPS for America Act to fund stock repurchases. Mr. Gelsinger, Mr. Mehrotra, and Mr. Archer expressed the commitments of their companies to make extensive R&D investments over the coming years.
  • Concerns Regarding the U.S.’S Reliance on Foreign Rare Earth Mineral Inputs for Semiconductors: Sen. Todd Young (R-IN) expressed some concerns over the U.S.’s reliance on foreign countries for the rare earth mineral inputs that were used in semiconductor production. Mr. Gelsinger testified that semiconductors had “fairly modest” requirements for rare earth minerals. He stated however that the use of rare earth mineral inputs in semiconductors deserved more investigation.
  • Concerns Regarding a Potential Chinese Invasion of Taiwan: Full Committee Ranking Member Roger Wicker (R-MS) and Sen. Rick Scott (R-FL) raised concerns over how a potential Chinese invasion of Taiwan would impact the U.S.’s semiconductor supplies. Sen. Scott argued that semiconductor companies ought to be proactively working to reduce and eliminate their business relationships with China in order to avoid an abrupt cessation of these relationships in the event of a Chinese invasion of Taiwan. Mr. Gelsinger noted however that China accounted for about half of the world’s semiconductor market and contended that a U.S. withdrawal from the market would undermine the U.S. semiconductor industry’s ability to remain globally competitive.

Hearing Witnesses:

1. Mr. Pat Gelsinger, Chief Executive Officer, Intel Corporation
2. Mr. Sanjay Mehrotra, Chief Executive Officer, Micron
3. Mr. Tim Archer, President and Chief Executive Officer, Lam Research
4. Mr. Preston Feight, Chief Executive Officer, PACCAR Inc

Member Opening Statements:

Full Committee Chairman Maria Cantwell (D-WA):

• She raised concerns that the U.S. was failing to domestically produce enough semiconductors to satisfy its national security and economic needs and noted how over 90 percent of the most advanced semiconductor chips currently came from Taiwan.
  • She asserted that semiconductor chip security was critical for the U.S.
• She remarked that the U.S. would need to make investments in semiconductor R&D efforts and commented that USICA would help to support these efforts.
• She mentioned how the U.S. had experienced layoffs and shortages in the automotive sector that were largely attributable to the current shortage of semiconductors.
  • She highlighted how current semiconductor shortages had caused the costs of used cars and new cars to increase by 41 percent and 12 percent, respectively.
• She also mentioned how the European Union Agency for Law Enforcement Cooperation (Europol) had just reported that counterfeiters were trying to exploit the current semiconductor shortage through introducing fake semiconductor chips into the market.
  • She commented that these fake semiconductor chips posed risks to critical infrastructure and defense systems.
• She further stated that the current semiconductor shortage was hampering the U.S.’s efforts to remove foreign telecommunications devices that could be compromised with “backdoors” from foreign governments.
  • She noted how the telecommunications industry had reported that wait times for certain networking equipment was now 50 weeks.
• She remarked that the U.S.’s overreliance on one country (i.e., Taiwan) for its semiconductor chips (and mainly one company within that country) was creating a giant target for hackers.
  • She mentioned how security researchers had found hacking campaigns that compromised at least seven Taiwanese semiconductor chip manufacturers.
• She called on Congress to advance USICA in order to address the current semiconductor shortage and highlighted how the legislation would make $2 billion in investments in the U.S. Department of Defense (DoD) to secure the microelectronics supply chains.
  • She mentioned how semiconductor chip foundries were already working overtime to produce enough chips to satisfy current demands.
• She also asserted that building new semiconductor chip foundries would need to be part of the long-term solution to satisfy the U.S.’s demands for semiconductor chips.

Full Committee Ranking Member Roger Wicker (R-MS):

• He remarked that the COVID-19 pandemic had exposed the fragility of the U.S.’s critical supply chains and stated that the current semiconductor chip shortage had exacerbated the U.S.’s supply chain challenges.
• He asserted that the U.S. had neglected the semiconductor industry “for decades” and noted how the U.S.’s share of global semiconductor manufacturing had fallen from nearly 40 percent in 1990 to about 12 percent today.
• He stated that foreign governments (including China) had seized on the U.S.’s lack of leadership within the semiconductor space, which had led the U.S. to become entirely dependent on foreign sources for advanced semiconductors.
  • He expressed interest in exploring how the U.S. had ceded this leadership in this area to foreign countries and why other countries had displaced the U.S. as the lead innovators in this area.
• He expressed his hope that U.S. House of Representatives and U.S. Senate leaders would soon come together to reconcile the U.S. Senate-passed USICA with the U.S. House of Representatives-passed America COMPETES Act of 2022.
• He noted how both of these bills included the CHIPS for America Act, which would provide tens of billions of dollars to incentivize domestic semiconductor manufacturing, stabilize the semiconductor supply chain, and make long-term investments in R&D.
  • He requested that the witnesses comment on how the CHIPS for America Act would impact their businesses.
• He then discussed how Russia’s recent invasion of Ukraine had highlighted the dangers associated with U.S. overreliance on dictatorships for key resources.
• He mentioned how China was currently challenging the sovereignty of Taiwan and noted how Taiwan now accounted for 92 percent of the world’s advanced semiconductor manufacturing capacity.
  • He asserted that a Chinese invasion of Taiwan would have significant consequences for the U.S.’s ability to access semiconductors.

Witness Opening Statements:

Mr. Pat Gelsinger (Intel Corporation):

• He first thanked the Committee for its support for funding of the CHIPS for America Act.
• He then mentioned how all digital products ran on semiconductors and stated that semiconductors were foundational to innovative technologies, including AI, 5G, AVs, and IoT.
  • He stated that the U.S.’s economic and national security were dependent on semiconductors.
• He discussed how digital transformation had led to “unprecedented” demand for semiconductor chips and noted how this demand had been made more acute by the COVID-19 pandemic and recent supply chain disruptions.
  • He testified that the semiconductor chip shortage had cost the U.S. economy $240 billion last year and indicated that the shortage was expected to continue until at least 2024.
• He commended Congress for its work to pass the CHIPS for America Act and stated that the semiconductor chip shortage had become more serious since the law’s passage.
  • He noted that while the European Union (EU) had commenced their work on their semiconductor legislation one year after Congress had developed the CHIPS for America Act, he indicated that the EU was already expected to make semiconductor funding available this year.
• He testified that other countries were “aggressively” offering significant incentives to semiconductor companies to build fabrication plans within their countries.
• He remarked that U.S. semiconductor policy ought to incentivize domestic manufacturing, boost R&D, address the skills gap, and enhance the national defense.
• He stated that the world needed a geographically balanced resilient supply chain for semiconductor manufacturing and mentioned how 80 percent of semiconductors were now built in Asia.
  • He indicated that only 12 percent of semiconductors were now built in the U.S. (with his company, Intel, accounting for half of this production).
• He mentioned how the operating cost to manufacture semiconductors in east Asia was between 30 percent and 50 percent cheaper as compared to the U.S.
  • He commented that these cheaper costs were particularly significant given how a modern advanced semiconductor fabrication plants cost $10 billion to build and equip.
• He then noted that global semiconductor demand was projected to double by the end of the decade and indicated that only the U.S., South Korea, and Taiwan could manufacture advanced semiconductor chips.
• He testified that Intel had performed the majority of its semiconductor R&D and manufacturing in the U.S. throughout its 53-year history and mentioned how the company had announced $43 billion in U.S. manufacturing investments over the previous year.
  • He indicated that these investments included expansions and new fabrication plants in New Mexico, Arizona, and Ohio.
• He further remarked that Intel had opened its plants to provide manufacturing capacity to U.S. and global semiconductor companies and stated that Intel wanted to onshore supply chains to the U.S.
• He mentioned how Intel was one of the world’s largest R&D spenders and expressed the company’s support for the creation of the National Semiconductor Technology Center (NSTC) and the National Advanced Packing Manufacturing Program under the CHIPS for America Act.
  • He called on Congress to restore the ability for companies to fully deduct their R&D expenses.
• He then discussed how Intel’s workforce consisted of well-paying jobs across a spectrum of construction, skilled manufacturing, and research.
• He stated that expanding access to science, technology, education, and mathematics (STEM) education was essential for building a pipeline of talented and diverse future technologists.
  • He mentioned how Intel had recently announced plans to invest $100 million over the next decade in partnerships with community colleges, universities, and the U.S. National Science Foundation (NSF).
• He lastly remarked that building out the U.S.’s semiconductor commercial capacity was “essential” for the U.S.’s defense and national security.
  • He further expressed support for having the U.S. develop a stronger partnership with the EU to meet mutual global needs.

Mr. Sanjay Mehrotra (Micron):

• He remarked that escalating geopolitical risks highlighted the need to reconcile and pass federal innovation legislation that would provide full funding for the CHIPS for America Act and the semiconductor ITC was part of the FABS Act.
  • He commented that these policies would invigorate domestic semiconductor manufacturing and allow for companies to invest with confidence in the future.
• He discussed how his company, Micron, was a leading producer of memory semiconductor chips and called these chips foundational for future technological innovation.
  • He indicated that Micron was the only company developing leading-edge memory and storage technology in the U.S. and highlighted how the company maintained operations within nine states (including a new facility in Georgia).
• He remarked that the U.S. government needed to “level the playing field” and create incentives to support investments in domestic semiconductor manufacturing facilities.
  • He noted how nearly every country that possesses a significant share of semiconductor manufacturing offers “major” government incentives for such manufacturing, including grants and tax breaks.
• He asserted that funding for the CHIPS for America Act and the establishment of a refundable ITC were needed to ensure the development and continued visibility of a scaled-up industrial base and to guarantee the domestic supply of both leading-edge and legacy semiconductor chips.
• He testified that Micron planned to invest $150 million over the next decade in leading-edge memory semiconductor chip manufacturing and R&D.
  • He also indicated that Micron was exploring plans to build new semiconductor fabrication plants within the U.S.
• He remarked that memory and storage semiconductor fabrication plants must consistently produce chips at very high volumes in order to be commercially viable over the long-term.
  • He stated that multiple facilities were required to achieve this scale and indicated that these facilities would each cost tens of billions of dollars to fully equip.
• He discussed how technological advancements were increasingly complex and expensive and noted how foreign competitors have benefited from significantly lower operating costs that were partially attributable to foreign government investments.

Mr. Preston Feight (PACCAR Inc):

• He discussed how his company, PACCAR, was a manufacturer of trucks and indicated that his company’s truck brands represented nearly 30 percent of the Class A market in the U.S. and Canada and around 16 percent of the heavy-duty truck market in Europe.
  • He mentioned how PACCAR was an American company with facilities in Washington, Ohio, Texas, Mississippi, and California.
• He thanked the Committee for its bipartisan work to address the current semiconductor supply shortage and noted how the shortage had been limiting the production of commercial trucks for the past year.
  • He commented that this shortage had led to a shortage of trucks, disrupted supply chains across numerous industries, raised prices for consumers, and delayed access to critical goods and services.
• He noted how over 70 percent of the U.S.’s freight was transported via trucks and how over 80 percent of U.S. communities depend exclusively on trucks to deliver their food, agricultural products, fuel, medicine, manufacturing inputs, business supplies, and consumer goods.
  • He further stated that more trucks were currently needed in order to build new housing, infrastructure, and communications networks.
• He testified that thousands of unfinished trucks were currently parked across the U.S. waiting for semiconductor chip-enabled components and indicated that additional trucks were out of service awaiting repair parts.
  • He called this situation “disturbing” given how the Class A trucking market had required an estimated 13 million semiconductors last year, which was significantly less than the semiconductor industry’s total output of over one trillion semiconductor chips.
• He stated that there had recently occurred “legitimate” force majeures that had hampered semiconductor production, including COVID-19- related plant shutdowns, the 2021 ice storm in Texas, and a fire in Japan.
• He testified that truck manufacturers had worked to mitigate these delays and shortages through investing in medium- and long-term semiconductor chip redesigns and engaging with semiconductor chip producers on best practices.
• He mentioned that truck original equipment manufacturers (OEMs) had needed to pay premium prices in order to purchase semiconductor chips on the broker market when it was not possible to purchase such chips directly from industry suppliers and chip manufacturers.
  • He indicated that these broker prices were often between 20 and 30 times higher than contract costs.
• He further highlighted how manufacturers were experiencing a lack of clarity surrounding semiconductor delivery schedules and were having their orders cancelled.
• He stated that companies requesting funding under the CHIPS for America Act should be required to meet the needs of “critical” businesses, including truck manufacturers, in order to receive the funding.
  • He suggested that the U.S. Department of Homeland Security (DHS) Cybersecurity and Infrastructure Security Agency’s (CISA) Essential Critical Infrastructure Workforce Guidance could be used to ensure that this funding was being used appropriately.
• He also recommended that that applicants for CHIPS for America Act funding be required to submit a plan to the U.S. Department of Commerce detailing how their existing semiconductor allocation strategy and investment decisions prioritized the production of semiconductors to support critical infrastructure industries and related jobs.

Mr. Tim Archer (Lam Research):

• He noted that his company, Lam Research, was one of the world’s largest semiconductor manufacturing equipment companies.
• He remarked that U.S. leadership in semiconductor manufacturing technology was strong and called it “vital” for the U.S. to create a secure and resilient supply of semiconductors while also accelerating innovation.
  • He stated that the CHIPS for America Act would fortify the U.S.’s semiconductor supply chain, workforce, and domestic R&D capabilities.
• He recommended that the U.S. take an “all of ecosystem” approach to semiconductors and commented that current semiconductor chip shortage had demonstrated the complex and interdependent nature of the semiconductor ecosystem and the need for sustained investment by companies throughout the supply chain.
• He testified that Lam Research had increased its U.S. workforce by over 45 percent in the previous two years, which accounted for more than 3,500 jobs.
  • He indicated that these new jobs included high paying engineering and advanced manufacturing jobs.
• He also mentioned how Lam Research relied upon “hundreds” of U.S. suppliers and noted how many of these suppliers were struggling to keep pace with rapid growth and dealing with the lingering effects of the COVID-19 pandemic and the tight labor market.
• He thanked policymakers for recognizing these challenges and for supporting the semiconductor industry through the U.S. Department of Commerce’s grant program (as established in the CHIPS for America Act) and the semiconductor ITC (as found in the FABS Act).
  • He urged Congress to act swiftly to pass these measures.
• He then remarked that the U.S. government and industry could leverage existing infrastructures to drive technology development.
  • He commented that partnerships with academia and the U.S. National Laboratories provide extensive capabilities and expertise that were needed for innovation.
  • He expressed support for the Microelectronics Research for Energy Innovation Act, which he explained would streamline coordination and better deploy federal resources, including the U.S. National Laboratories, to sustain research partnerships.
• He lastly expressed interest in fostering coordination between industry, government, academia, and the U.S. National Laboratories on semiconductor issues through the proposed NSTC.

Congressional Question Period:

Full Committee Ranking Member Roger Wicker (R-MS):

• Ranking Member Wicker noted how the U.S. currently accounted for 12 percent of the world’s semiconductor manufacturing. He asked Mr. Gelsinger to indicate where the other 88 percent of the world’s semiconductor manufacturing was occurring.
  • Mr. Gelsinger noted how approximately 80 percent of the world’s semiconductor manufacturing was occurring in Asia. He indicated that this manufacturing was led by Taiwan, South Korea, China, and Japan. He also noted how about 9 percent of the world’s semiconductor manufacturing was occurring in Europe.
• Ranking Member Wicker asked Mr. Gelsinger to indicate whether the decline in the U.S.’s percentage of global semiconductor manufacturing was attributable to the fact that it had become cost effective to manufacture semiconductors in Asia.
  • Mr. Gelsinger stated that Asian countries had “aggressively” supported their semiconductor industries with policies and incentives. He highlighted how China had provided between 30 percent and 70 percent in capital incentives for semiconductor manufacturing. He also mentioned how South Korea had recently announced a $100 billion capital program for their semiconductor industry. He further noted how many of the “lower end” supply chains were already in Asia. He commented that these convenient locations had enabled supply chain consolidation, which resulted in efficiencies. He specifically mentioned how China had consolidated the supply chains around power supplies, sheet metal enclosures, and displays. He remarked that the U.S.’s semiconductor manufacturing priorities had been too focused on costs and should be more focused on resiliency. He stated that the CHIPS for America Act would help to make the U.S. semiconductor industry more cost competitive vis-a-vis Asian countries.
• Ranking Member Wicker asked Mr. Gelsinger to indicate whether labor costs were contributing to the U.S. semiconductor industry’s global competitiveness challenges.
  • Mr. Gelsinger commented that while labor costs were contributing to the U.S. semiconductor industry’s global competitiveness challenges, he noted that capital costs were the largest costs for semiconductor fabrication plants. He stated that labor costs were more impactful in other parts of the semiconductor supply chain.
• Ranking Member Wicker provided Mr. Mehrotra with an opportunity to add to Mr. Gelsinger’s responses.
  • Mr. Mehrotra noted how the U.S. only accounted for 2 percent of the world’s semiconductor memory manufacturing. He indicated that the remaining 98 percent of this manufacturing was in Asia. He attributed Asia’s dominance in semiconductor memory manufacturing to the government policies of Asian countries. He indicated that Micron was responsible for the 2 percent of the world’s semiconductor memory manufacturing that was occurring within the U.S. He asserted that the CHIPS for America Act and a semiconductor ITC would help the U.S. to overcome the significant cost advantage that Asian countries possessed in semiconductor manufacturing. He specifically stated that the U.S. needed to bolster its domestic manufacturing of semiconductor memory chips.
• Ranking Member Wicker highlighted how foreign governments had spent government funds to incentivize the production of semiconductor chips within their jurisdictions. He contended that the U.S. government would need to spend government funds (whether through grants, loans, or tax incentives) in order to incentivize U.S. domestic semiconductor manufacturing.
  • Mr. Gelsinger expressed agreement with Ranking Member Wicker’s remarks. He also discussed how foreign countries had recently recognized the importance of the semiconductor industry and mentioned how the EU, India, China, South Korea, and Taiwan had recently taken actions to further support their domestic semiconductor industries. He asserted that it was therefore urgent for the U.S. to support its domestic semiconductor industry.
• Ranking Member Wicker then asked Mr. Feight to address whether the U.S. currently possessed the needed workforce to increase its semiconductor production.
  • Mr. Feight remarked that the U.S. had a great workforce. He stated however that skills specific training would be needed as the U.S. semiconductor industry continued to develop.
• Ranking Member Wicker asked Mr. Feight to confirm that the partnership between East Mississippi Community College, Mississippi University for Women, and Mississippi State University had benefited PACCAR’s Columbus, Mississippi facility.
  • Mr. Feight confirmed that the partnership between the three schools had benefited PAACAR’s Columbus facility.

Sen. Ron Johnson (R-WI):

• Sen. Johnson discussed how semiconductor manufacturing had moved outside of the U.S. as a result of other countries providing financial incentives to semiconductor manufacturers to move their operations. He asked Mr. Gelsinger to address whether the U.S. semiconductor industry had ever considered the operational and national security risks associated with moving semiconductor production abroad.
  • Mr. Gelsinger testified that Intel’s manufacturing operations had remained primarily within the U.S. He stated that the “vast majority” of Intel’s investments were in the U.S. and Europe. He acknowledged that Intel maintained a “very small” number of investments in Asia. He stated that the rest of the semiconductor industry had moved “dramatically” toward Asia in response to government incentives from foreign countries. He emphasized that Intel was one of the few companies that had remained dedicated to U.S. R&D and manufacturing investments.
• Sen. Johnson asked Mr. Gelsinger to indicate Intel’s share of U.S. domestic semiconductor manufacturing.
  • Mr. Gelsinger testified that Intel was responsible for “about half” of the U.S.’s domestic semiconductor manufacturing.
• Sen. Johnson remarked that the heavy subsidization of semiconductor manufacturing by foreign countries should constitute an unfair trade practice. He stated that the U.S. could address these unfair practices through either tariffs or establishing its own industrial policy. He commented that the CHIPS for America Act was seeking to do the latter.
  • Mr. Gelsinger noted how foreign countries understood how semiconductors were critical for future digital innovation. He contended that it was therefore very important for the U.S. to restore its semiconductor manufacturing capabilities. He reiterated his call for Congress to take action on the CHIPS for America Act and the FABS Act.
• Sen. Johnson expressed concerns regarding the U.S. government’s ability to allocate capital with regard to semiconductor manufacturing. He suggested that the U.S. should instead focus on challenging the semiconductor manufacturing policies of other countries as unfair trade practices.
  • Mr. Gelsinger remarked that foreign government policies incentivizing semiconductor manufacturing had been developed over decades. He contended that the absence of U.S. incentives for domestic semiconductor manufacturing would further undermine the U.S. semiconductor industry’s ability to compete internationally. He cautioned that the loss of the U.S.’s domestic semiconductor industry could not be reversed.
• Sen. Johnson asked Mr. Gelsinger to estimate how much money foreign countries had provided to their semiconductor manufacturers.
  • Mr. Gelsinger mentioned how the EU, South Korea, and Chian had proposed providing $45 billion, $100 billion, and over $100 billion to their respective semiconductor industries in the past year. He remarked that the CHIPS for America Act sought to support public-private leveraged investments into the U.S. semiconductor industry. He further stated that the legislation would support long-term research investments into semiconductors.
• Sen. Johnson asked Mr. Gelsinger to indicate whether the U.S. already possessed sufficient capital for use in semiconductor investments.
  • Mr. Gelsinger stated that the U.S. possessed sufficient capital for use in semiconductor investments.
• Sen. Johnson reiterated his assertion that other countries were engaged in unfair trade practices with regard to their semiconductor incentive policies.
  • Mr. Gelsinger remarked that other countries had invested in their domestic semiconductor industries because semiconductors were foundational to other important technology industries. He called on the U.S. to take actions to restore its domestic semiconductor industry.
• Sen. Johnson raised concerns that competing government incentives for semiconductor manufacturing would ultimately harm all countries involved in these policies.
  • Mr. Gelsinger remarked that the imposition of tariffs and other export policies on semiconductors would harm the U.S. because other countries were not imposing similar tariffs and export policies on their industries. He contended that the U.S. should instead work to restore American competitiveness and improve its trade and export practices globally.
• Sen. Johnson acknowledged that while tariffs harmed U.S. consumers, he expressed concerns that U.S. subsidies for semiconductor manufacturing would lead other countries to provide even more generous subsidies to their semiconductor manufacturers so that they could better compete with the U.S.

Full Committee Ranking Member Roger Wicker (R-MS):

• Ranking Member Wicker asked Mr. Gelsinger to discuss how the U.S. Defense Advanced Research Projects Agency (DARPA) had supported U.S. semiconductor innovation through investments.
  • Mr. Gelsinger noted how many of the original elements of the U.S. semiconductor industry dated back to Bell Laboratories and DARPA research and investments. He stated that these historic investments had produced the core technology that serve as the basis for the internet, semiconductors, and AI. He contended that the CHIPS for America Act’s NSTC provision was thus critical given its potential for long-term benefits.
• Ranking Member Wicker asked Mr. Gelsinger to indicate whether the adoption of the Trans-Pacific Partnership (TPP) would have addressed some of the foreign government semiconductor subsidy issues previously discussed by Sen. Ron Johnson (R-WI).
  • Mr. Gelsinger expressed his support for the previous TPP agreement and noted how the TPP countries would have represented the vast majority of the world’s semiconductor producers.
• Ranking Member Wicker requested that Mr. Gelsinger supplement his response to the question for the hearing’s record. He specifically asked Mr. Gelsinger to address whether the TPP would have addressed foreign government subsidies of semiconductor research.

Full Committee Chairman Maria Cantwell (D-WA):

• Chairman Cantwell expressed interest in ensuring that the U.S. maintained a manufacturing supply chain for semiconductor chips. She noted how the U.S.’s leadership in leading-edge semiconductor chip manufacturing had continued to decrease with every successive generation of leading-edge semiconductor chips. She highlighted how China was spending the majority of their money on semiconductors on commercialization efforts. She expressed interest in having the U.S. translate its basic and advanced semiconductor research into commercial applications so that it could maintain and grow its leading-edge semiconductor manufacturing base. She asked Mr. Gelsinger and Mr. Mehrotra to discuss the advancements that the U.S. would need to make with regard to semiconductor chip capabilities.
  • Mr. Gelsinger noted how the number of transistors on an Intel semiconductor chip had increased from 1.2 million transistors in 1989 to 25 billion transistors today. He stated that leading-edge semiconductor chips were critical to supporting innovative technologies (e.g., AVs, AI, mRNA sequencing, wireless communications connectivity). He elaborated that these technologies required high performance computing at the lower power capabilities in order to process the most advanced algorithms. He predicted that there would exist a 1 trillion transistor semiconductor chip by the end of the decade.
• Chairman Cantwell asked Mr. Feight to discuss PACCAR’s semiconductor needs moving forward.
  • Mr. Feight discussed how the trucking industry would require leading-edge semiconductor chips to support EVs, zero emissions vehicles, and AVs. He noted however that the trucking industry would require less advanced semiconductor chips in order to ensure the continued affordability of trucks. He stated that it would be impractical to have new generations of semiconductor chips every two-to-three years for products and commented that this constant innovation would make the costs of products very expensive.

Sen. Jerry Moran (R-KS):

• Sen. Moran noted how the Semiconductor Industry Association had found that less than 5 percent of the global semiconductor manufacturing share for packaging, assembly, and testing was done within the U.S. He stated there were companies throughout the U.S. that were well-positioned to increase the U.S. semiconductor manufacturing industry’s capacity. He asked the witnesses to discuss the importance of having the CHIPS for America Act’s investments address the post-fabrication element of the semiconductor supply chain in order to address broader supply chain and national security vulnerabilities.
  • Mr. Gelsinger noted how semiconductor packaging, assembly, and testing, which tended to be more dependent on low labor costs, had increasingly moved to Asian countries. He remarked that the U.S. needed to restore the integrity of the entire semiconductor supply chain (including advanced packaging, assembly, and testing) to the U.S. (or to North America at a minimum). He noted how the CHIPS for America Act contained provisions to support the U.S.’s advanced semiconductor packaging capabilities. He expressed his desire for the complete semiconductor supply chain to be onshored to the U.S. He commented that this onshoring should include many of the subcomponents and key minerals used to produce semiconductors (in addition to advanced packaging, assembly, and testing capabilities).
  • Mr. Mehrotra remarked that investments in leading-edge semiconductors would provide the greatest opportunities for semiconductor innovation and differentiation. He also contended that semiconductor ITCs would be important for ensuring U.S. leadership in semiconductor R&D and manufacturing. He further stated that the U.S. should support semiconductor advanced manufacturing capabilities as part of its policy efforts to promote the domestic semiconductor industry. He then discussed the importance of semiconductor research and noted how this research had previously been used to dramatically reduce the price of semiconductor production. He called on the U.S. to bring more leading-edge memory semiconductor technology onshore. He lastly stated that these investments in domestic semiconductor capabilities would result in job creation.
• Sen. Moran then asked the witnesses to identify the federal funding sources that were being used to support domestic semiconductor research.
  • Mr. Gelsinger mentioned how academic institutions played a key role in supporting semiconductor research. He noted how the NSF and DARPA had served as two sources of sustained government partnerships in this area. He stated however that the U.S. government’s role in funding semiconductor research had been “dramatically” reduced over the past several decades. He remarked that government-funded research was very important for the semiconductor industry. He stated that academic institutions and the proposed NSTC could also support U.S. semiconductor research. He further mentioned how European and Asian governments were funding their own domestic semiconductor research.
• Sen. Moran mentioned how he served on the U.S. Senate Committee on Appropriations where he oversaw overall funding levels for DARPA and the NSF. He noted how the U.S. Senate Committee on Appropriations had increased federal funding for research. He indicated however that the federal research agencies were responsible for determining where this funding would be spent. He expressed interest in working to influence this research agency spending through the appropriations process in order to support semiconductor research.

Sen. Ed Markey (D-MA):

• Sen. Markey expressed interest in the environmental impacts of semiconductor chip manufacturing and stated that the U.S. needed a plan to account for these impacts. He noted that while Lam Research had committed to achieving carbon neutrality by 2050, he contended that Lam Research ought to instead work towards achieving net zero greenhouse gas emissions. He asked the other witnesses to commit their companies to achieving net zero greenhouse gas emissions by 2050.
  • Mr. Gelsinger testified that Intel would soon be releasing their plan to achieve net zero greenhouse emissions by 2040. He also mentioned how Intel had received recognition for its work on water reclamation, minimization of hazardous gasses and chemicals, and overall sustainability.
  • Mr. Mehrotra remarked that Micron was making “strong progress” with respect to greenhouse gas emission reductions, waste management, water recycling, and renewable energy usage. He indicated that Micron would soon announce a target date for its greenhouse gas emissions reduction goals.
• Sen. Markey requested that Mr. Mehrotra follow up with the Committee to provide a target date for the company’s greenhouse gas emissions reduction goals. He then discussed how the production of semiconductors required millions of gallons of water per day and noted how the water usage of semiconductor companies was “skyrocketing.” He stated that semiconductor chip manufacturers must work to restore water to their local water systems so that they were replacing the water that they used with an equal amount of clean water. He commended Intel for its pledge to be net positive on water usage by 2030. He asked Mr. Mehrotra to indicate whether Micron could make a similar commitment regarding its water usage.
  • Mr. Mehrotra mentioned how Micron maintained a successful water restoration program in Boise, Idaho. He also noted how Micron had committed to investing over $1 billion over a seven-year period in programs related to sustainable operations (including water recycling). He indicated that Micron’s annual sustainability reports included timelines regarding the company’s sustainability efforts.
• Sen. Markey remarked that the semiconductor industry would be expected to improve the environmental sustainability of their operations in exchange for the U.S. government’s support for the industry.
  • Mr. Mehrotra stated that environmental sustainability was a priority for Micron and reiterated how the company published annual sustainability reports that outlined the company’s sustainability milestones and goals. He stated that Micron would announce its specific environmental goals “soon” and that these goals would have higher and more ambitious targets.

Sen. Rick Scott (R-FL):

• Sen. Scott first mentioned how U.S. consumers were strongly opposed to Russia’s recent invasion of Ukraine and were now expecting U.S. companies to stop engaging in business with Russia as a result of the invasion. He stated that a company engaged in business with China should be concerned about the U.S. consumer response in the event of a Chinese invasion of Taiwan. He then discussed how Intel was one of the top ten most profitable companies in the U.S. and was the world’s second largest semiconductor producer. He also mentioned how Intel had recently invested $25 billion to expand its semiconductor chip manufacturing operations (including in his state of Florida). He mentioned how Mr. Gelsinger had stated last year that Intel’s capital investments did not depend on any federal or state government support. He commented that Intel appeared to be changing their view regarding their need for government support. He also noted how Mr. Gelsinger had previously stated that semiconductor manufacturers should not “waste” the current public health crisis in regard to receiving federal support. He further highlighted how Intel had apologized to China for U.S. sanctions on the Xinjiang province (where the Chinese government was committing genocide against the Uyghur people). He asked Mr. Gelsinger to indicate how the U.S. taxpayer would receive a return if the U.S. were to provide government funds to Intel. He also asked Mr. Gelsinger to explain why Intel was continuing to engage in business with China in light of the country’s human rights abuses and potential to invade Taiwan. He further asked Mr. Gelsinger to address why Intel was not investing even more money into the U.S. and its allies in order to reduce its dependence on China.
  • Mr. Gelsinger testified that Intel had lowered its profitability by 600 basis points this year, became free cash flow negative for the first time in three decades, and doubled its capital investments in order to support its semiconductor production investments. He commented that these moves were unpopular with the Wall Street community. He remarked that the CHIPS for America Act would enable Intel to further increase its semiconductor production investments. He stated that every job that Intel created would result in ten or more additional jobs on average given the importance of semiconductors throughout the entire economy. He highlighted how Intel’s new Ohio facility would create 3,000 new jobs and 7,000 new construction jobs.
• Sen. Scott interjected to ask Mr. Gelsinger to specify how much money the U.S. taxpayer would receive based on the CHIPS for America Act’s proposed $4 billion investment into Intel.
  • Mr. Gelsinger reiterated that semiconductor production would support the creation of other jobs throughout the economy. He expressed Intel’s willingness to follow up with Sen. Scott regarding the company’s reports on the benefits of new semiconductor jobs.
• Sen. Scott expressed skepticism with regard to Intel’s ability to produce a net benefit for U.S. taxpayers in exchange for a $4 billion investment.

Full Committee Chairman Maria Cantwell (D-WA):

• Chairman Cantwell interjected to note that Sen. Rick Scott’s (R-FL) question period time had expired. She noted how Mr. Gelsinger’s written testimony had indicated that California’s annual economic impact from Intel was $24.9 billion, Oregon’s annual economic impact from Intel was $19.3 billion, Arizona’s annual economic impact from Intel was $8.6 billion, and New Mexico’s annual economic impact from Intel was $1.2 billion. She noted that the CHIPS for America Act would provide $52 billion to support the U.S. semiconductor industry and commented that this funding would foster a more robust U.S. semiconductor ecosystem. She further stated that the CHIPS for America Act would enable companies (like Intel) to further invest in their domestic semiconductor manufacturing operations.

Sen. Amy Klobuchar (D-MN):

• Sen. Klobuchar expressed interest in the U.S.’s current workforce shortages. She stated that addressing these shortages would require immigration policy reforms and new workforce training programs (including apprenticeships and one- and two-year degree programs). She mentioned how she had proposed bipartisan legislation that would allow for workers to obtain college credit for completed apprenticeships. She asked Mr. Gelsinger and Mr. Archer to discuss how the private sector could work with governments on addressing the current workforce shortages.
  • Mr. Gelsinger mentioned how Intel had recently announced a $100 million partnership with the NSF for job creation efforts (primarily surrounding Intel’s new Ohio facility). He remarked that Intel had a long history of public-private partnerships that are focused on increasing employment opportunities. He testified that Intel was making “strong advancements” to boost the participation of underrepresented minorities and females in technology and making large investments in STEM education. He mentioned how he had personally attended a community college and highlighted the benefits of community colleges. He noted how Intel had launched its AI for Future Workforce Program, which was specifically aimed at community colleges. He testified that much of Intel’s workforce was hired with either no or minimal technology education and indicated that Intel partnered with community colleges to provide such education.
  • Mr. Archer remarked that addressing the current tight labor market would be key to resolving the current semiconductor chip shortage. He noted how Lam Research depended upon hundreds of American suppliers that were spread across 37 different states and indicated that these suppliers faced their own labor shortages. He expressed Lam Research’s support for government workforce training programs and immigration policy reforms.
• Sen. Klobuchar then mentioned how Micron employed 110 semiconductor chip designers in her state of Minnesota. She asked Mr. Mehrotra to discuss the importance of investing in U.S.-based companies in the production of semiconductors and innovation.
  • Mr. Mehrotra remarked that Micron was a global leader in semiconductor memory and storage technologies. He called it imperative that Micron be able to bring leading-edge semiconductor manufacturing onshore as part of its over $150 million investment in leading-edge semiconductor manufacturing and R&D. He mentioned how Micron already maintained a semiconductor manufacturing facility in Virginia that was providing advanced memory and storage semiconductors to automotive, defense, and industrial markets. He expressed Micron’s commitment to bring more manufacturing into the U.S. through CHIPS for America Act investments and semiconductor ITCs.
• Sen. Klobuchar indicated that she would submit a question for the record on her bipartisan shipping reform legislation.

Sen. John Thune (R-SD):

• Sen. Thune mentioned his work on bipartisan bills meant to ease current strains on U.S. supply chains, including the Ocean Shipping Reform Act of 2022 and the Facilitating Relief for Efficient Intermodal Gateways to Handle Transportation (FREIGHT) Act. He stated the effects of the current semiconductor shortage had highlighted the importance of supply chains within the U.S. automobile industry. He noted how the transition to AVs would further increase demand for semiconductors and asserted that it was critical for the U.S. to remain the leader in AV technology. He stated that the U.S.’s regulatory framework and supply chains for EVs must keep pace with private sector innovation and mentioned how he had worked to develop bipartisan AV legislation. He asked Mr. Feight to identify actions that Congress and the U.S. Department of Transportation could take to encourage the testing and deployment of AVs (beyond bolstering the U.S.’s technological competitiveness through investments in supply chains and domestic industries).
  • Mr. Feight remarked that the U.S. AV industry needed clarity as to the policies that would govern the AV space and the liabilities that AV makers would be subject to. He stated that the U.S. AV industry was currently in a “very good spot” regarding its development of Level 4 autonomy and commented that safety would need to be paramount in these efforts. He remarked that there would need to exist a “general knowledge sharing” between the U.S. government and industry on the deployment of AVs.
• Sen. Thune provided Mr. Gelsinger with an opportunity to comment on efforts to promote the domestic development of AVs.
  • Mr. Gelsinger remarked that other countries maintained more favorable AV regulatory policies and were deploying AVs more rapidly than the U.S. He called for the U.S. to take a more active role in the deployment of AV technology. He stated that Intel’s Mobileye division was a leader in the global AV space. He noted that while much of the AV technology was currently being developed within the U.S., he indicated that much of the deployment of this technology was occurring abroad. He then discussed how AV technology required advanced AI capabilities, which in turn required advanced semiconductor technologies. He noted that semiconductors currently accounted for 4 percent of automobiles and indicated that this share was expected to jump to 20 percent by the end of the decade. He asserted that semiconductors would therefore be critical for the future of the transportation industry.
• Sen. Thune indicated that he would submit a question for the hearing’s record on current 5G deployment efforts.

Sen. Tammy Baldwin (D-WI):

• Sen. Baldwin mentioned how Congress was currently putting together a conference Committee to advance USICA. She then discussed how foreign governments had provided generous incentives to their domestic semiconductor manufacturers. She highlighted however that Intel had spent about 64 percent of its net income on stock buybacks while Samsung and Taiwan Semiconductor Manufacturing Company (TSMC) had only spent 10 percent and 2 percent of their net incomes on stock buybacks, respectively. She expressed her interest in ensuring that CHIPS for America Act funding would support domestic semiconductor manufacturing capabilities. She asked the witnesses representing semiconductor companies to briefly describe the spending plans of their companies for the next few years. She also asked these witnesses to address how CHIPS for America Act funding would impact these spending plans.
  • Mr. Gelsinger mentioned how he had become Intel’s CEO about one year ago and indicated that he had ceased Intel’s stock buyback policy upon becoming CEO. He testified that he had doubled Intel’s capital expenditures during this period and had made Intel free cash flow negative for the first time in over three decades. He further stated that he expected these capital expenditures to only increase for the next decade. He remarked that Intel’s capital buildout was likely the largest corporate capital buildout ever and indicated that the majority of Intel’s new capital investments would be located within the U.S. He stated that CHIPS for America Act funding would enable Intel to further increase these capital expenditures and make these expenditures faster. He asserted that these investments would help the U.S. to reclaim semiconductor market share from Asia. He contended these efforts were important from both an economic and national security perspective.
  • Mr. Mehrotra testified that Micron was the only U.S. company that manufactured memory and storage semiconductors and highlighted how semiconductor memory and storage represented nearly 60 percent of the worldwide wafer production. He stated that Micron was the global leader in DRAM and NAND technology. He attributed Micron’s leadership to its investments in leading-edge R&D and manufacturing, which he estimated to be worth tens of billions of dollars. He stated that the increasing demand for data necessitated Micron’s continued R&D and manufacturing efforts surrounding leading-edge semiconductors. He further mentioned how Micron had recently announced that it would be investing more than $150 billion over a decade in leading-edge semiconductor R&D and manufacturing.
  • Mr. Archer noted how Lam Research manufactured the machines that produced semiconductor chips. He stated that his Lam Research’s priorities would remain focused on expanding capacity in order to bolster semiconductor manufacturing. He testified that 70 percent of Lam Research’s manufacturing capacity was in the U.S. and that Lam Research spent about 90 percent of its R&D budget within the U.S.

Sen. Raphael Warnock (D-GA):

• Sen. Warnock asked Mr. Gelsinger to indicate whether the semiconductor shortage had likely contributed to higher prices for certain consumer goods (including automobiles, computers, and washing machines).
  • Mr. Gelsinger answered affirmatively.
• Sen. Warnock also noted how the semiconductor shortage had forced a Kia plant in his state to temporarily shut down on several occasions. He mentioned how he had worked to include funding for domestic semiconductor production as part of USICA. He asked Mr. Gelsinger to indicate whether providing additional funding for the CHIPS for America Act funding would help the U.S. to alleviate the current semiconductor shortage.
  • Mr. Gelsinger answered affirmatively and called on Congress to swiftly advance a competition bill.
• Sen. Warnock remarked that Congress needed to approve CHIPS for America Act funding. He then stated that the U.S. needed a robust and diverse semiconductor workforce. He mentioned how he was a graduate of a HBCU and how he had worked to include $1.2 billion in funding for research capacity building at HBCUs and minority serving institutions (MSIs) as part of USICA. He also expressed support for efforts to establish an Office of Opportunity and Inclusion at the U.S. Department of Commerce. He explained that this Office would develop standards meant to expand opportunities in the semiconductor industry for traditionally underrepresented groups. He asked the witnesses to answer whether an Office of Opportunity and Inclusion at the U.S. Department of Commerce would support the semiconductor industry’s efforts to attract more women, people of color, and rural workers.
  • Mr. Gelsinger remarked that Intel was “deeply committed” to increasing the diversity of its workforce. He mentioned how Intel had set a goal to have a 40 percent female workforce by 2040. He stated that Intel’s decision to establish a new facility in Ohio and recently announced workforce investments were meant in part to bolster the company’s minority and female workforces.
• Sen. Warnock asked Mr. Gelsinger to indicate whether the creation of an Office of Opportunity and Inclusion at the U.S. Department of Commerce would encourage similarly situated companies to make their own diversity commitments.
  • Mr. Gelsinger commented that such an Office could result in more corporate diversity commitments and expressed interest in further discussing the topic with Sen. Warnock.
  • Mr. Mehrotra remarked that Micron viewed the promotion of greater diversity as a core value. He mentioned how Micron produced a diversity and inclusion report every year and noted how the report highlighted the company’s key diversity and inclusion initiatives. He specifically highlighted how Micron was focused on improving pay equity across genders and underrepresented groups in terms of salaries and bonuses. He further mentioned how Micron was working to engage in business with minority suppliers and investing its money in minority financial institutions.
  • Mr. Archer remarked that Lam Research was supportive of any activities that could expand the U.S. workforce. He mentioned how Lam Research partnered with the National GEM Consortium (which included HBCU members) to help students pursue advanced degrees in science and engineering so that they could have careers in the semiconductor industry.
  • Mr. Mehrotra added that Micron had recently opened a center in Atlanta, Georgia that was engaged with HBCUs. He testified that this center would be recruiting 500 engineers over the next few years and stated that this center would seek to access the region’s diverse talent.

Sen. Gary Peters (D-MI):

• Sen. Peters discussed the important role that semiconductors played in automobiles and noted how the semiconductor chip shortage was adversely impacting the automobile industry. He contended that semiconductors would play an increasingly important role in the automobile industry in future years given the importance of semiconductors in EVs and AVs. He mentioned how he would chair an upcoming field hearing in Detroit, Michigan on the role that semiconductors played in the future of automotive innovation. He called for making the semiconductor supply chain more resilient and commented that his state of Michigan was well-positioned to lead this effort. He discussed how automobiles were becoming increasingly electronic and autonomous, which would require more leading-edge semiconductor chips (especially with regard to memory and storage capabilities). He reiterated that Michigan would be well-suited to support the semiconductor industry given its manufacturing base and world-class universities. He asserted that funding for the CHIPS for America Act would be key for supporting this domestic semiconductor production. He asked Mr. Mehrotra to discuss how Micron’s memory and storage technologies would play a role in future EVs and AVs, as well as other Michigan-manufactured products.
  • Mr. Mehrotra remarked that Micron was the global leader in market share for semiconductor memory and storage. He mentioned how Micron had worked closely with automobile manufacturers during the COVID-19 pandemic and testified that Micron’s memory and storage semiconductor chips did not cause any semiconductor production shutdowns. He stated that Micron had earned its market share as a result of the high quality of its products. He then discussed how AVs were currently using significantly denser semiconductors and remarked that Micron was continuing to work with automobile manufacturers to help them to more quickly transition to newer semiconductor technologies. He commented that these transitions would increase the availability of semiconductors and protect against shortages. He asserted that both CHIPS for America Act funding and semiconductor ITCs would be helpful in terms of boosting domestic leading-edge semiconductor manufacturing, as well as taking market share away from Asia.

Sen. Jacky Rosen (D-NV):

• Sen. Rosen expressed interest in how the current semiconductor shortage was impacting broadband deployment efforts. She mentioned how she had helped to author the provisions of the Infrastructure Investment and Jobs Act that provided grants to states and local governments to support their broadband deployment efforts. She asked Mr. Gelsinger to discuss how semiconductor supply chain issues and shortages had impacted the telecommunications industry and to address how these shortages would impact federal broadband programs (especially the programs created under the Infrastructure Investment and Jobs Act).
  • Mr. Gelsinger first discussed the important role that Intel played in supporting Open RAN platforms. He then remarked that the COVID-19 pandemic had demonstrated the critical nature of broadband networks given how these networks had been needed to support remote working and learning during the pandemic. He stated that innovative technologies, including 5G, 6G, AVs, smart cities, and smart factories, depended on the most advanced semiconductors. He commented that this situation underscored the importance of the CHIPS for America Act.
• Sen. Rosen then expressed concerns over how the current semiconductor shortage was impacting the tourism industry. She noted how many rental car companies had sold off some of their fleets during the pandemic and stated that the U.S now had a rental car shortage. She commented that this situation was harming economies that depend on tourism (including Las Vegas, Nevada). She asked Mr. Gelsinger to discuss the actions that Intel is taking to ensure that semiconductor chips are being manufactured and distributed to automobile makers in a manner that supports industries critical to tourism.
  • Mr. Gelsinger remarked that the current automobile shortages were due to shortages in older semiconductors and commented that these shortages highlighted the U.S.’s “gross” dependence on Asian semiconductors suppliers. He mentioned how Intel had recently announced its acquisition of Tower Semiconductor and stated that this acquisition increased Intel’s ability to respond to the automobile industry’s near-term challenges. He testified that Intel’s top three priorities in order regarding the allocation of its semiconductor chips were manufacturers of semiconductor equipment, the health care sector, and the automotive sector.

Sen. Todd Young (R-IN):

• Sen. Young contended that USICA was “vitally important” for the U.S. from a national security standpoint. He stated that U.S. leadership in science and technology would be key drivers of the U.S.’s economy and important for global competitiveness with China. He discussed how USICA would establish a new NSF Directorate for Technology and Innovation, regional technology hubs across the U.S., and CHIPS for America Act funding. He noted how the U.S. Senate appeared to be taking action on USICA and expressed support for advancing the proposal. He called it imperative for the U.S. to reduce its reliance on other countries throughout the entire semiconductor supply chain. He noted how neither Mr. Gelsinger nor Mr. Mehrotra had mentioned China in their written testimonies. He asked Mr. Geslsinger and Mr. Mehrotra to address what the current state of the semiconductor industry was with regard to China. He also asked Mr. Geislinger and Mr. Mehrotra to project the semiconductor industry’s future in China.
  • Mr. Gelsinger discussed how China had emphasized the development of a domestic semiconductor industry and stated that China had made “substantial progress” in building up their semiconductor industry. He remarked however that China was mainly manufacturing older semiconductors and older industries rather than leading-edge technologies. He asserted that the U.S. must be thoughtful in its sales of semiconductors to China so that it could maximize product revenues while maintaining its technology advantages and intellectual property (IP). He noted how China was the world’s largest semiconductor chip market and commented that U.S. companies needed to participate in the Chinese market so that they could maintain their global leadership.
  • Mr. Mehrotra attributed the Chinese semiconductor market’s size to demand from both Chinese companies and global businesses operating within China. He remarked that Chinese semiconductor demand did help Micron to scale its operations, which ultimately supported Micron’s R&D investments. He also mentioned how China was making significant investments in their domestic semiconductor industry and called it important for the U.S. to support its domestic semiconductor industry through providing CHIPS for America Act funding and establishing a semiconductor ITC. He further stated that the U.S. needed to promote free market access, fair trade policies, and IP protections in order to foster fairness in the global semiconductor market.
• Sen. Young commented that USICA would help the U.S. to achieve Mr. Mehrotra’s stated objectives within the semiconductor space. He then asked the witnesses to indicate whether they had concerns regarding the U.S.’s reliance on foreign countries for the rare earth mineral inputs that were used in semiconductor production.
  • Mr. Gelsinger testified that semiconductors had “fairly modest” requirements for rare earth minerals. He remarked however that the U.S.’s semiconductor supply chain needed to be resilient and stated that rare earth mineral inputs deserved more investigation.

Sen. John Hickenlooper (D-CO):

• Sen. Hickenlooper first commended Intel for establishing its new Ohio facility and stated that the CHIPS for America Act would create construction, research, and manufacturing jobs throughout the U.S. He then expressed interest in the job training needs for domestic semiconductor production and mentioned how there were estimates that the U.S. would require between 100,000 and 300,000 new workers by 2025 to manufacture semiconductor chips. He asked the witnesses to address how the U.S. could upskill and reskill workers from relevant manufacturing fields in order to satisfy the U.S.’s workforce needs.
  • Mr. Gelsinger noted how the CHIPS for America Act included provisions meant to address the U.S.’s workforce needs. He stated that public-private partnerships would be key to addressing these needs and mentioned how Intel had recently announced a $100 million workforce development initiative around its Ohio facility. He highlighted how this initiative would seek to support community colleges, K-12 STEM education, minority communities, and women in technology fields. He also mentioned how over 50 percent of the STEM students at U.S. universities were foreign nationals. He contended that the U.S. ought to make it easier for these foreign national STEM students to remain in the U.S. post-graduation.
• Sen. Hickenlooper then discussed the U.S.’s decline as a semiconductor chip manufacturer and stated that foreign subsidies and incentives had driven much of this manufacturing activity abroad. He asked Mr. Mehrotra, Mr. Archer, and Mr. Gelsinger to discuss how factors (such as trade policy) would impact the U.S. domestic semiconductor industry’s rebalancing.
  • Mr. Mehrotra called it important for there to exist a “level playing field” between the U.S. and its global competitors. He remarked that CHIPS for America Act funding coupled with the creation of a semiconductor ITC would help to foster a fairer environment. He also stated that workforce development policies would be “extremely important” for supporting public-private partnerships. He further called for policies that supported free trade and open markets with countries that provided IP protections for companies.
  • Mr. Archer testified that Lam Research had added over 3,500 U.S. jobs in the previous two years. He remarked that Lam Research and its suppliers were experiencing challenges related to the tight labor market and expressed support for public policies that would help to expand the U.S.’s skilled workforce. He commented that USICA contained elements that would support these efforts.

Sen. Kyrsten Sinema (D-AZ):

• Sen. Sinema remarked that semiconductors were essential for both the economic and national security and mentioned how the current semiconductor shortage was impacting U.S. families. He stated that her state of Arizona was a national leader in semiconductor manufacturing and R&D and indicated that the semiconductor industry employed over 20,000 Arizonans. She discussed how the U.S.’s semiconductor manufacturing in recent decades had declined relative to the rest of the world’s semiconductor manufacturing. She commented that this situation left the U.S. vulnerable and reliant on other countries. She mentioned how she was an original co-sponsor of the CHIPS for America Act and stated that the legislation had led Intel and TSMC to announce significant investments in Arizona. She called on Congress to approve legislation that would fund the grants under the CHIPS for America Act. She asked Mr. Gelsinger to provide an update on Intel’s expansion plans in Arizona, to estimate how many jobs this expansion would create, and to discuss the expansion’s impact on domestic semiconductor manufacturing.
  • Mr. Gelsinger first testified that Intel’s Arizona project was “ahead of schedule” and stated his expectation that the Arizona facility would begin coming online in late 2024. He indicated that the Arizona project would employ 3,000 new employees and would support between 5,000 and 6,000 new construction jobs for the next couple of years. He also mentioned how First Lady Jill Biden had recently joined Intel for its Maricopa County education initiative.
• Sen. Sinema reiterated how Congress had not yet passed legislation into law that would provide funding for CHIPS for America Act grants. She asked Mr. Gelsinger to address how Congress’s failure to promptly pass such legislation into law would impact Intel and their Arizona expansion project.
  • Mr. Gelsinger remarked that CHIPS for America Act funding would enable Intel to expand and expedite their domestic semiconductor investments. He testified that he was currently reducing Intel’s profitability levels so that the company could focus on its R&D investments and commented that these investments were unpopular amongst the Wall Street community. He asserted that Intel’s current investments would be insufficient for restoring the U.S.’s leadership in semiconductor technology. He further suggested that CHIPS for America funding could enable Intel to make additional investments in its facilities in Arizona, Ohio, and Oregon.
• Sen. Sinema then commended Intel’s Quick Start workforce development program and its partnership with Mesa Community College. She asked Mr. Gelsinger to describe how this program would train semiconductor technicians in Arizona.
  • Mr. Gelsinger explained that Intel’s partnership with Mesa Community College would involve Mesa Community College establishing training programs with Intel’s input on curricula. He commented that this partnership would help Mesa Community College graduates obtain jobs at Intel post-graduation. He remarked that this partnership would decrease risks for students, increase the effectiveness of the educational program, and build a workforce for the future.

Sen. Rick Scott (R-FL):

• Sen. Scott first expressed interest in obtaining precise estimates regarding the direct monetary returns that the CHIPS for America Act would provide to the U.S. government. He then asked Mr. Gelsinger to explain Intel’s decision to apologize to Chinese companies regarding U.S. sanctions.
  • Mr. Gelsinger first noted how his written testimony included state-level economic impact assessments of Intel’s investments and expressed his interest in further following up with Sen. Scott on the subject.
• Sen. Scott interject to comment that revenues and returns were distinct things 
  • Mr. Gelsinger contended that revenues were important for states because they produced tax benefits. He also stated that the CHIPS for America Act was meant to return semiconductor market share from Asia to the U.S. and to bolster the U.S.’s national defense. He commented that these benefits were sometimes non-economic in nature. He then discussed how Intel’s China comments were in response to the company’s global supplier letter. He explained that this letter was meant to minimize risks in Intel’s supply chain. He stated that the global supplier letter in question had inappropriately included a reference to a single region in the world and called this reference a mistake.
• Sen. Scott interjected to ask Mr. Gelsinger to clarify whether he was asserting that it was inappropriate for Intel to caution against the purchase of products made using slave labor.
  • Mr. Gelsinger remarked that Intel’s global supplier letter clearly expressed the company’s opposition to the practice of slave labor. He stated however that the letter should not have called out any particular region by name and commented that this call out was the reason for Intel’s apology. He reiterated Intel’s opposition to slave labor and remarked that Intel would continue to manage its global supply chains in adherence to this value.
• Sen. Scott then noted how many U.S. consumers were currently frustrated with companies that engaged with business in China due to China’s human rights abuses. He predicted that a Chinese invasion of Taiwan would increase pressure among U.S. and European consumers for companies to cease engaging in business in China. He contended that U.S. companies (including Intel) ought to therefore be proactive in working to reduce their reliance on China.
  • Mr. Gelsinger noted how the Chinese semiconductor market constituted nearly 50 percent of the world’s semiconductor market. He indicated that approximately half of China’s semiconductor market involved manufacturers and suppliers and that the other half of China’s semiconductor market involved consumers. He further noted that China’s semiconductor market was the largest growing semiconductor market in the world. He remarked that Intel’s intent to become the world’s largest provider of semiconductors therefore necessitated the company’s participation in the Chinese semiconductor market.
• Sen. Scott interjected to reiterate his concerns that a potential Chinese invasion of Taiwan could force Intel to abruptly cease its business activities within China. He commented that this abrupt cessation of business activities posed a material risk to the company.
  • Mr. Gelsinger remarked that Intel was deepening its investments in manufacturing and R&D within the U.S. and supplying the global market for semiconductors in accordance with existing laws and policies. He stated that a Chinese invasion of Taiwan would be very concerning and that this concern drove the company to focus on bolstering its domestic capabilities.
• Sen. Scott reiterated his concerns that the CHIPS for America Act would not create returns on investment for U.S. taxpayers. He also reiterated his criticism of Intel’s apology to China and its stated intention to maintain its business relationships with China in the event of a Chinese invasion of Taiwan.

Full Committee Chairman Maria Cantwell (D-WA):

• Chairman Cantwell contended that Sen. Rick Scott (R-FL) was mischaracterizing Mr. Gelsinger’s comments. She also mentioned how Boston Consulting Group had conducted an analysis of semiconductor investments that found that a $50 billion semiconductor manufacturing incentive would generate $147 billion in gross domestic product (GDP) and 1.1 million jobs over six years. She remarked that USICA was meant to create a framework to foster the next generation of supply chains domestically. She further praised the witnesses for prioritizing R&D over profits in their recent actions.