Letter to the Hon. Nancy Pelosi, Speaker of the House - Joining Bipartisan Effort to Secure Emergency Funding to Address Auto Semiconductor Shortage

Letter

Dear Speaker Pelosi and Minority Leader McCarthy,

We write to express our strong support for at least $2 billion in emergency spending to
implement the initiatives authorized in the Creating Helpful Incentives to Produce
Semiconductors (CHIPS) for America Act for "mature nodes" also known as "legacy chips."

The automotive industry is being disproportionately harmed due to the ongoing shortage of
legacy chips. A new car may require over 100 semiconductors for touch screens, engine controls,
driver assistance cameras and other systems. Because of the semiconductor shortage, the
American automotive industry has shut down production lines, laid off union workers or has
produced cars with fewer features (i.e., leaving out built-in navigation systems).

A shortage of legacy chips, commonly used for automobiles, was created due to various changes
in supply chains, consumer demand and production capabilities during the pandemic. When
vehicle demand increased during the second half of 2020, auto parts suppliers and subsequently
auto manufacturers were unable to secure the legacy chips and parts they needed. A fire at a
Renesas Electronics Corporation semiconductor plant in Japan, droughts in Taiwan and storms in
Texas further exacerbated the global semiconductor shortage.

Without a sufficient supply of semiconductors, auto companies have idled plants and furloughed
thousands of auto plant workers during an economic recession. According to AlixPartners, the
global automobile industry will lose $110 billion in revenue and produce 3.9 million fewer cars
than planned in 2021 due to the semiconductor shortage. Estimates by Goldman Sachs and
Gartner project that the semiconductor shortage will continue into the second quarter of 2022.
This will have a continued negative impact on auto workers unless Congress acts now.

While the U.S. is a world leader in semiconductor design, domestic production of
semiconductors has declined, and we are reliant on East Asia for manufacturing semiconductors.
Even before the pandemic began, price volatility led to constraints on raw materials of
semiconductors, which have only been exacerbated. In order to save jobs and ensure there is a robust domestic automotive manufacturing industry in the U.S., there must be a significant
investment in production of legacy chips.

The CHIPS Act authorized programs to incentivize domestic semiconductor production and
support research and development programs and workforce development programs that promote
semiconductor production. The U.S. Innovation and Competitiveness Act, which included $52
billion in emergency supplemental appropriations to fund these provisions, passed the U.S.
Senate on June 9, 2021. Of this amount, $2 billion was set aside for the production of legacy
chips. This investment is needed immediately.

We support the U.S. House of Representatives working on its own legislation to support
American competitiveness and innovation. That being said, due to thousands of jobs being lost
because of the legacy chip shortage, it is essential that we act to provide at least $2 billion in
emergency supplemental appropriations to produce these chips. We hope you will bring up
legislation to support automotive jobs as soon as possible.