U.S. Sen. Bill Hagerty recalls being in Spring Hill, Tennessee, in March when the first all-electric Cadillac Lyriq rolled off the assembly line, marking what General Motors President Mark Reuss called “a new era” for America’s biggest automaker.
But as officials celebrated the occasion, Hagerty said he was troubled to see a whole field of unfinished Lyriqs unable to be completed and sold because GM couldn’t get the computer chips needed to run the new vehicles. Even though most computer chips were invented or created in the United States, 88% of the world’s chip manufacturing is now done in other countries, according to the Semiconductor Industry Association, and the pandemic has created many supply chain problems getting chip supplies to the United States for a range of industries.
In a speech Thursday to the Chattanooga Area Chamber of Commerce at The Signal, Hagerty said CEOs of chip manufacturers told him they located in other countries because of the extra regulations over land, water, chemicals and building permitting that slowed projects in America. The U.S. share of the worldwide chip manufacturing market has declined from 37% in 1990 to 12% today, according to the Semiconductor Industry Association.
“It took them five or six years just to get the required permits in the U.S., and in that amount of time new chips had already been invented or updated,” Hagerty said.
The semiconductor industry has taken hold in China, which Hagerty said is now America’s biggest economic, military and political threat.
(READ MORE: Hobbled by chip, other shortages, GM profit slides 40% in second quarter)
In response, Hagerty introduced legislation, which passed the U.S. Senate by unanimous consent in January, to help untangle the permitting process for key national-security manufacturing operations, like semiconductors, by granting them access to the FAST-41 improved federal permitting program.
“This will make our nation more competitive by strengthening the American semiconductor industry and accelerating America’s efforts to win the strategic competition with the Chinese Communist Party that will define the century,” Hagerty said. “This will provide significant regulatory relief for critical American industries during this era of predatory behavior by the CCP.”
At President Joe Biden’s urging, Congress passed the Chips and Science Act in late July to invest more than $200 billion over the next five years to help the U.S. regain a leading position in semiconductor chip manufacturing.
Aided by the new regulatory approach and federal assistance, Intel Corp. will break ground in Ohio next month on what is projected to grow to a $100 billion investment in semiconductor facilities, known as fabs, that will employ 3,000 people in the biggest investment ever in Ohio.
Hagerty said regulatory reform is crucial in keeping America competitive in other industries. The Republican senator, who previously served as Tennessee’s chief economic recruiter as commissioner of the state Department of Economic and Community Development, blamed today’s inflation on the Biden administration’s decision to scrap the Keystone natural gas pipeline and to limit oil drilling offshore and on many federal properties.
(READ MORE: Biden: South Korean chip plant a model for deeper ties to Asia)
Such decisions caused oil prices to more than double after Biden was elected, Hagerty said.
But the White House blames the jump in energy prices on supply chain problems coming out of the pandemic and the cutoff of Russian oil supplies after the Russian invasion of Ukraine. Biden said inflation is less and the economy is stronger in the United States than in Europe.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340. Follow on Twitter at @Dflessner1.