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House and Senate Tackle Semiconductor Chip Shortages and Seek to Boost U.S. Production

How COVID and supply chain woes are driving $52 billion in incentives for domestic production of semiconductor chips.

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Photo of Intel CEO Pat Gelsinger courtesy Web Summit

WASHINGTON, April 21, 2022 – Lawmakers on both sides of the aisle in Washington have made explicit the need to tackle the supply chain crisis and semiconductor shortage by introducing and pushing forward separate pieces of legislation that emphasize more domestic autonomy. But the path of these pieces of legislation isn’t exactly cut-and-dried.

Despite a key bill that would make available $52 billion in incentives for the domestic production of semiconductor chips – critical for computers, cars and networking equipment – passing both chambers, one key Republican said his party has been largely shut out of contributing to the language of the legislation.

Representative John Curtis, R-Utah, a member of the House Energy and Commerce Committee, told Broadband Breakfast this month that Republicans have been shut out of legislative discussions for the past year as the Democratic party has enjoyed a majority in the House and the Senate.

Curtis, who is also head of the Conservative Climate Caucus, said he has yet to be approached by the White House on what seems to be a larger piece of the Biden policy plan for semiconductor and supply chain independence.

This sentiment among House Republicans has created friction as the bill heads to conference committee, which is designed to bring both parties to the table to hammer out language they can agree on before it goes to the president for signing.

Conferees were appointed by House Speaker Nancy Pelosi, D-Calif., on April 7, just before the House began its Easter break. Sorting out difference between the House-passed and Senate-passed versions is likely to be one of the first items of business when representatives return to Washington next week.

Broadband Breakfast has been following the intertwining issue of the supply chain crisis and the U.S.’s ambitions to be more independent when it comes to producing the chips needed to power the future.

As the Covid-19 pandemic has held up key supplies in foreign lands and as domestic law and policy have moved to shore up national security by banning Chinese-made products from the country’s networks and more, this publication will outline the key bills that both chambers are mulling over.

The U.S. Innovation and Competition Act, and the COMPETES Act

The first of these bills is the United States Innovation and Competition Act, S.1260. Passed by the Senate in June 2021 with a margin of 68-32, this bill provides funding through fiscal year 2026 to support domestic semiconductor manufacturing, research and development and supply chain security. It also targets funding for wireless supply chain innovation.

The initial goal was for this bill to go to the House for votes, but the House instead presented a bill with similar goals – the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength Act of 2022 (America COMPETES Act of 2022, H.R. 4521) – which was introduced in the summer of 2021.

It passed the House on February 4 by a margin of 222-210, demonstrating the tension between the parties, and then passed the Senate in late March by a 68-28 spread.

The Competes Act must now go to the aforementioned conference committee to iron out the party differences. After that is done, the bill will make another voting trip through both chambers and, if successful, out to the president for signing.

“Over the past year, the House and Senate have acted independently to pass their own versions of competitiveness legislation,” Senate Majority Leader Chuck Schumer, D-N.Y., said on March 17, as he addressed the Senate. “To reconcile the differences between these bills, both chambers must enter a conference before we send the final product to the president’s desk.”

The CHIPS funding proposal

The separate bills have common ground in that they both call for injecting $52 billion over five years into the Creating Helpful Incentives to Produce Semiconductors (CHIPS) For America Fund, a Treasury Department coffer that was created through the 2021 National Defense Authorization Act.

That money will be divided into a $39-billion financial incentives program and an $11-billion research and development program.

Mike Molnar, the founding director of the Advanced Manufacturing National Program Office, which is responsible for the Manufacturing USA program, said during a question-and-answer session about the CHIPS program Tuesday that the money is “not too much” and that both the incentives program and the R&D program must be paired for their goal to be achieved.

The federal government has been fielding comments since January about the makeup of the program, which will go toward producing chips and semiconductors that may otherwise be imported from countries like Taiwan, China, and South Korea.

Pressure mounts for some form of legislation

In March, a Senate Committee on Commerce, Science, and Transportation heard that only 12 percent of chip manufacturing occurs in America, and 6 percent of that comes from Intel. However, while Intel – which appeared with three other technology companies at the hearing – has remained primarily U.S.-based, Intel CEO Pat Gelsinger said that other countries can make the same chips it makes for 30-80 percent cheaper.

Intel is currently scheduled to break ground this year on a $20 billion semiconductor manufacturing “mega-site” in rural Ohio.

Gelsinger also shared that many overseas companies have government subsidies and incentives, which makes it easier and cheaper for them to make the chips. He said this is a key reason why Congress needs to pass the competitive legislative bill with the CHIPS funding included in the final product.

In February of 2021, President Joe Biden signed the executive order on America’s supply chains to begin efforts to restore America’s supply chains, and this past February, exactly one year later, the administration released a comprehensive plan based on the results of their work correlated with the executive order.

The report evaluated the current state of the supply chain, including as it affects technology, how the U.S. can develop its own manufacturing assets, where those assets would fit in the current supply chain, and how it would affect competition.

It’s reports such as those that add credence to lawmakers pushing for funding pieces such as those under the America COMPETES Act, which may still have some ways to go before the president himself can approve it.

Innovation

Labor Official Sees Benefits in Virtual, Augmented Reality for Workforce Training

The virtual tools are being used to prepare workers coming out of lockdowns during the pandemic.

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Photo of Dan Risko, Governmental Relations Manger of TRANSFR

WASHINGTON, September 21, 2022 – The Labor Department is touting the ability of virtual and augmented reality tools to help employers train employees remotely, an industry event heard on Friday.

“You had companies like Talespin who was in the XR [extended reality] space particularly using XR for training, mailing headsets to folks learning to be claims adjusters for companies like Farmers Insurance, and you would put on that headset and all of a sudden you were in a house that had a fire and you learn how to do an investigation of a house with a fire so you could do a claims adjustment,” Chike Aguh, the Labor Department’s chief innovation officer, said at the AR/VR policy conference Friday.

“This was in the height of 2020 when frankly we didn’t know how that was gonna turn out,” he added.

Aguh added that the Lab for Applied Social Science Research at the University of Maryland is using XR to assist vulnerable populations that are returning to their daily tasks following the pandemic.

XR technologies have been used during the pandemic to train workers, but it also has been used to retain them as well, according to one company.

These virtual reality tools helped increase company retention rate, said Dan Risko, governmental relations manager of TRANSFR Inc., which helps students train for the workforce using VR. He said that the retention rate climbed from 30 percent to 90 percent using these XR tools.

Risko said the company saw the results after putting people in a pre-apprenticeship program where people would perform the job before they had the job. He added the company has partnered with a workforce agency in the south that was having issues of worker retention.

Risko said TRANSFR has expanded training to community colleges and technical centers.

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Innovation

Treasury to Release Three Reports on Digital Currencies in ‘Coming Weeks’

The reports will discuss digital asset implications on national security, financial inclusion, privacy and citizens.

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Photo of Treasury Secretary Janet Yellen

WASHINGTON, August 29, 2022 – The Treasury Department announced last week it will be releasing a series of reports about the security and state of digital currencies in the U.S. “in the coming weeks.”

The department said three reports will be released and will discuss the impact of digital assets on issues such as national security, financial inclusion, privacy and on consumers, businesses, and investors.

The department’s August 24 announcement will fulfill a commitment required by a March executive order from the Biden administration that mandates within 180 days the department produce a report about the future of money and payments systems, including adoption of digital assets, and the implications of technology and those assets on the country’s financial system.

The Biden administration has put “a high level of urgency towards research and development efforts into a potential U.S. central bank digital currency,” Julia Smearman, director of international financial markets at the Treasury Department, said Wednesday.

At an event earlier this year, experts pondered whether the U.S. was falling behind other nations, such as China, when it comes to developing their own digital currency.

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Blockchain

IBM Exec Touts Blockchain Technology as Economy Accelerator

Blockchain will be commonplace in the economy ‘within the decade,’ the IBM executive said.

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Screenshot of Jerry Cuomo, IBM vice president of blockchain technologies

WASHINGTON, August 23 – Blockchain technology will speed up the economy in the coming decade in part by making the process of verifying information – such as user identity – more safe, streamlined and efficient, said IBM’s vice president of blockchain technologies at a Tech Forward event on Tuesday.

Jerry Cuomo described blockchain as an “odd duck” type of database with a few defining features, explaining that each blockchain has several administrators, that each transaction must be vetted by the administrators before being recorded to the digital “ledger,” and that transactions, once recorded to the ledger, are essentially impossible to change or delete. Cuomo also explained that each data point – or “block” – in each blockchain is heavily encrypted, which creates high levels of security and user trust.

Although blockchain is most widely associated with the transactions of cryptocurrencies like Bitcoin, Cuomo said it can used for a wide variety of purposes – including identity verification, food safety and intra–supply chain communication. For example, Cuomo suggested that instead of making hundreds of accounts on various websites, a user may soon be able to have a single, blockchain-based identity that would be accessible whenever verification is necessary.

Cuomo said he believes food safety, for example, can be improved by using blockchain technology to document salient information about food conditions during transport. IBM Food Trust is a blockchain-based service that the company says allows participants to track a food product throughout a given supply chain and to ensure that it is safe, fresh, and sustainably sourced.

The company said it offers a wide variety of blockchain services. IBM’s supply chain service, for instance, promises “data integrity and faster reconciliation,” features that are made possible by the immutability of each blockchain record once it is entered into the ledger.

As for the timetable on blockchain technologies becoming commonplace in the economy? “I think its within the decade,” said Cuomo. “This is not an ‘if,’ this is a ‘when.’”

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