Why industry supports the government’s $110 billion bet on technology R&D

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The technology industry is rooting for a bill the Senate passed earlier this year. The U.S. Innovation and Competition Act authorizes $110 billion over five years to fund research in artificial intelligence, semiconductors, quantum computing and related technologies. For why at least one sector likes this bill, Federal Drive with Tom Temin turned to the president and CEO of the Information Technology Industry (ITI) Council Jason Oxman.

Interview transcript:

Tom Temin: Jason, good to have you back.

Jason Oxman: Thanks, Tom. It’s good to be with you.

Tom Temin: And this bill, of course, sets up regional technology centers lots of money and grants. What is industry’s general take on what it will do?

Jason Oxman: Well, this is an enormously important bill, we’re strongly supportive of this legislation, glad it moved through the Senate, hope it moves through the House quickly and to the president’s desk. It’s really critical for expanding America’s technology leadership. It has, as you mentioned, a lot of investment and focus on technology leadership, on economic competitiveness, U.S. innovation including funding for development of technology centers, research, high tech jobs – there’s really a lot in it that’s going to be important for the U.S. economy and important for our technology leadership around the world.

Tom Temin: Yeah, and of course, this is aimed – at least all the accounts I’ve read in the summary of it – at China. And I guess, maybe industry’s view, it kind of gives industry the backup that maybe Chinese industrial counterparts have from their government?

Jason Oxman: Yeah, that’s a really important point. And nowhere is this more evident than in the semiconductor provisions in this bill, there’s funding in here – $52 billion for something called the CHIPS Act for America. The CHIPS Act is focused on investing in manufacturing capability here in the U.S. for semiconductors. We’ve all heard about the shortage of semiconductors across all industries around the world. And as the semiconductor industry looks to increase manufacturing capability, we think it’s enormously important that we do that here in the United States. China provides enormous subsidies for companies to invest in semiconductor manufacturing there. We think it’s more important that it happened here. It’s important for manufacturing, it’s important for job creation, it’s important for national security. And this legislation has the funding in it. We need it to become law in order for that to become realized, but we think that’s enormously important to have happen.

Tom Temin: Yes, because short term, the world is relying on Taiwan semiconductor manufacturing. And just as China came in and kind of smashed Hong Kong, it seems like Taiwan is probably next in their sights. So there’s a short-term worry, because of that, correct?

Jason Oxman: Well, the long-term interest of the U.S. is to have companies like Taiwan Semiconductor Manufacturing Corporation (TSMC) build manufacturing capability in the U.S. It’s a great company, Intel is a great company. There are other great manufacturers of semiconductors that do so in the U.S. like Texas Instruments. We love AMD – all these companies are terrific and we want them to continue to grow their supply. But we want them to do it in the U.S. We don’t want them to build their next generation of plants elsewhere. We don’t want it built in China, we want it built in the U.S. So the CHIPS Act has that funding in it to help semiconductors be built here in the U.S. And we think that’s what we should be doing.

Tom Temin: And I guess maybe the larger question then is, what are the policies that gave rise to the exodus of chip manufacturing from the United States in the first place? I mean, we’d still refer constantly to Silicon Valley, which used to be Silicon Valley. Now it’s “Software Valley,” and Lord knows what else but the [Facilitating American-Built Semiconductors] have closed up and moved elsewhere. Maybe there’s something in our policies that could foster industry to stay here in the first place?

Jason Oxman: Well, it’s an enormously important question. And it is the driving force behind this legislation, the U.S. Innovation and Competition Act is designed to replace those national policies that we used to have to encourage manufacturing in the U.S. with a new generation of policies that invest in national security and global economic competitiveness. So you’re absolutely right. Just a couple of decades ago, in the 90s, well over 25% of the world’s semiconductors were manufactured here in the U.S. Today, that number is closer to 11%. So we really have lost in almost an entire generation of manufacturing capability. So the policy change that needs to happen is reverting back to policies that support manufacturing here in the U.S., support job creation, support research and development. And that’s exactly what this legislation does. And we’re hoping to reverse the trend that we’ve seen in the last couple decades of the manufacturing of semiconductors moving outside of the U.S. Let’s bring it back to the U.S.

Tom Temin: We’re speaking with Jason Oxman, president and CEO of the Information Technology Industry Council. Because you wonder if someone proposed a million-square-foot FAB somewhere in California, or in Washington state or even Texas for that matter – how long such a thing would be tied up with environmental reviews and regulatory red tape, that is both federal, state and local.

Jason Oxman: And this partnership among all levels of government, with the federal government leading the way, is enormously important to addressing those kind of concerns. What we’ve in recent years is really industrial policy from other areas of the world – China leading the way such that it becomes much more expensive to build a semiconductor manufacturing facility in the U.S. than outside of the U.S. for all of those reasons you mentioned, ranging from the time it takes to get the permitting to actual funding from government, to help secure the investing to tax credits that helped make it more economically viable to build those facilities. So other countries are doing this around the world. Hence, the reason that semiconductor manufacturing has moved outside of the U.S. If we can get the U.S. Innovation and Competition Act, and the CHIPS Act funding moved forward, signed into law by the president, we have a real opportunity to re-engage with the R&D, the tech talent and the manufacturing capability here in the U.S. It’s going to have enormous economic benefits, it’s going to have enormous national security benefits – we really need to get it done.

Tom Temin: And when you look at chip manufacturing, in some ways, it’s the final step in a long chain of suppliers – Air Products, companies like that – construction, all sorts of high tech semiconductor manufacturing equipment. And then of course, a semiconductor chip is the expression of millions and millions of lines of code etched into hardware. So there’s all this software development. It seems like these could really be great economic engines.

Jason Oxman: No question. The semiconductor industry really is the backbone. It’s the building block for everything. There is not a device on the market today that doesn’t have semiconductors inside it, ranging from the phones that we’re talking on right now across the world, to artificial intelligence to supercomputers to cars and vacuum cleaners and everything in between. So no question – these are the backbones they are the essential building block for every device that’s manufactured. So we have an opportunity to increase the manufacturing capability. We really have the opportunity to build every industry that’s built on top of semiconductors. So it has enormous spillover benefits for economic competitiveness.

Tom Temin: And the bill deals with more than simply semiconductors. There’s quantum computing, there’s artificial intelligence, a whole string of things that would seem to create an ecosystem that seems to be ebbing at the moment in the country.

Jason Oxman: It’s all of those things, it’s funding for all of those areas that you just mentioned. It’s also a really important focus in this legislation, on training and trade and economic and manufacturing jobs, high-skilled jobs in the U.S. We need more high-skilled jobs and we need more high skilled workers. And retraining, reskilling is enormously important. But also STEM education to get people into these high-skilled jobs is important. So there’s a lot of programs in the US innovation and Competition Act that would advance that as well. It really is an omnibus bill that looks at the global economic competitiveness of the United States, and takes concrete steps in a number of different areas, to build out capabilities that will help grow the U.S. economy and help the U.S. compete internationally.

Tom Temin: And do you ever think that perhaps this could also help some of the economically underprivileged, if you will, areas of the country that drive through large swaths of Appalachia, through the Rust Belt, Youngstown, Ohio; and parts of Indiana and states like that, where you see vast former factories, or gigantic sites that are nothing but you know, rubble at this point. It seems like there’s a great opportunity for training people and building facilities where you already have open land that used to be a factory of long ago.

Jason Oxman: And the technology industry really has taken a lead in doing that. Companies like Intuit is one I think of that is invested in technology jobs in West Virginia in the middle of Appalachia and is creating hundreds of new jobs and retraining and reskilling people. And that’s why the workforce components of the U.S. Innovation and Competition Act are so important because we do have an opportunity to transform areas of the country that have maybe seen their heyday with different types of manufacturing transform into high tech manufacturing. But it really is about the skilling of workers and also the STEM training and making sure that we make our STEM training start early enough and makes it attractive to people in areas that may not have had STEM training, starting in middle school, starting in elementary school, working through high school into associate degrees, making sure we don’t view the four-year college degree as the only potential path to getting a good high-paying job. These are all provisions that are in the U.S. innovation and Competition Act and one of the reasons that the tech industry, which needs these workers, and has these jobs available, is so supportive of the legislation.

Tom Temin: And what is ITI doing to make sure this advances in the House at this point?

Jason Oxman: Well, we have worked hard to get it through the Senate and we were very pleased to see it passed the Senate with overwhelming bipartisan support. Now we need to move to the House. ITI and the tech industry that we represent, all 80 of our member companies that are global technology and innovation powerhouses are telling the story of how the U.S. Innovation and Competition Act will advance the U.S. economy, will help create great jobs and help move forward our economic competitiveness. We’re telling that story in the House. We’re there every day and meeting with folks and helping them understand the importance of this legislation, and we’re doing everything we can to move it forward.

Tom Temin: Jason Oxman is president and CEO of the Information Technology Industry Council. Thanks so much for joining me.

Jason Oxman: Thank you.

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