-9999

Floor Speech

BREAK IN TRANSCRIPT

Mr. CORNYN. Madam President, in the summer of 2020, the senior Senator from Virginia, Senator Warner, and I introduced the CHIPS for America Act to reshore semiconductor manufacturing here in the United States.

I didn't know much about semiconductors when we got started, but I have learned a lot, and what I have learned is that this is an essential commodity that we have over time offshored to places like Asia that we need to reshore or bring back to America for our economy and for national security.

Currently, 90 percent of the semiconductors in the world are manufactured in Asia. Sixty-three percent of the semiconductors in the world come from one place: Taiwan. If COVID has taught us one thing, it has taught us how vulnerable our supply chains can be. And the truth is, semiconductors have become so critical to our way of life, to our economy, and to our national security, to everything we do, that if that supply were blocked for some reason--either as a result of another pandemic or a natural disaster or, Heaven forbid, a military conflict-- it would be devastating to the United States and our economy and our national security.

That is why, when our bill was introduced as an amendment to the Defense authorization bill, it passed 96 to 4. Clearly, we had strong, bipartisan support here in the Senate. It took less than 7 months from the time we introduced the bill until it became law, and then 6 months later, the Senate passed the U.S. Innovation and Competition Act, with $52 billion in funding for the CHIPS Program.

Had this legislation been introduced years ago, before the pandemic, I don't think it would have received either such quick action or such broad bipartisan support. That is not because this type of investment wasn't needed. There is clear data that showed a concerning trend in U.S. chip manufacturing.

We saw big investments made by other countries in their own capabilities and a business model primarily by Taiwan Semiconductor Manufacturing Company, which I visited along with colleagues in Taipei just a few months ago, where their business model is to manufacture chips made and designed--I should say designed by companies that need those semiconductors. But rather than build their own manufacturing capability, their own foundry, they outsourced that to Taiwan Semiconductor. So Taiwan and particularly Taiwan Semiconductor have become the focal point for the production of semiconductors around the world.

Well, there was general agreement that something should be done before COVID-19, but it certainly wasn't at the top of everyone's priority list. But, as I said, when the pandemic hit, the vulnerability of our supply chains for everything from PPE--personal protective equipment--to semiconductors became apparent.

Well, how has that affected everyday Texans, folks from Nevada or Colorado? Well, we found out that an absence or a lack of semiconductors meant empty car lots. You couldn't buy a new car. You couldn't get a computer, perhaps for your child to be able to study virtually during a quarantine period or during a period of virtual learning at schools across the country.

We saw higher prices adding to the problem with inflation. Suddenly, those concerning data points turned into real-world problems. Consumers who never even dreamed or thought about a semiconductor before found themselves impacted by this global shortage. The new car they had been saving up for wasn't available. The Christmas gift they planned to order for their children was out of stock.

While the lack of consumer products is a big problem, it pales in comparison to the security risk created by the chip shortage. Simply put, semiconductors are vital to our critical infrastructure. Our grid keeps on the lights and makes it possible to heat our buildings during the cold of winter. They run our cell towers that enable us to talk on our cell phones or download data and do searches on the web. They are critical to our energy grid, our water treatment plants, and our agricultural sector. Semiconductor chips make it all possible.

As I said, our national defense also depends on semiconductors. When we send our troops on any mission by air, sea, land, or cyber space, they need the best equipment available, and usually what that means is the most advanced technology available. Advanced fighters, quantum computing, missile defense--all rely on semiconductors.

I asked my staff to research back when Israel was using the Iron Dome missile defense system to knock rockets out of the sky that were destined to hit population centers in Israel. I said: Find out for me how many semiconductors are in each one of those missile defense interceptors. They came back with a figure of 750 chips in each one of those missile defense interceptors.

So it is not hard to imagine we would be in big trouble if a lack of supply crippled any of these functions, and unfortunately, it is a real possibility. Over the years, domestic chip production has steadily dropped as other countries have upped their manufacturing capabilities. As I said, 90 percent of that manufacturing is now in Asia.

We had the idea--and it is not a crazy idea--that if somebody could make things cheaper overseas, then that is the most efficient way for that product to be made, but we didn't calculate these supply chain problems which COVID-19 exposed.

But we know, as I said, that if there were another pandemic or let's say a natural disaster or a military conflict, the People's Republic of China has made no secret about its plan to unify with Taiwan. President Xi has explicitly said invasion of Taiwan will happen, and he has asked that his military be ready by the year 2027. But we don't actually know what his timetable may be, and if China follows through on its threats to invade Taiwan and interrupts that supply chain of critical semiconductors, it would be dramatically bad for the United States and the world. Our national security and critical infrastructure could be hobbled by a single decision made by the President of the People's Republic of China.

I was reminded of Jimmy Carter's 1980 speech at the State of the Union when he spoke about instability in the Persian Gulf and Soviet threats to the movement of Middle East oil through the Strait of Hormuz. President Carter said at the time--when we were so dependent on imported oil from the Middle East--he said any attempt to gain control of the Persian Gulf and to block the Strait of Hormuz would be ``regarded as an assault on the vital interests of the United States of America.''

You could say the same about a blockade that prevented us from getting semiconductors from Asia. Just as the Soviets could have blocked the Strait of Hormuz and choked off the global supply, the People's Republic of China could seize Taiwan's supply of chips and its manufacturing facilities and hold the rest of the world at risk. The United States and our allies would be left fighting for the crumbs, what was left over.

Our country isn't the only one, fortunately, that spotted this blinking red light. Other countries are pouring tens of billions of dollars into new semiconductor foundries. The European Union is now investing up to $35 billion. South Korea is investing $65 billion. The People's Republic of China is reportedly investing $150 billion in semiconductor manufacturing.

The United States cannot be left behind, and we can't drag our feet. Unlike PPE--personal protective equipment--or hand sanitizer shortages, this one cannot be solved quickly. Companies that make other technologies can't just adjust to the lack of semiconductors. In order to build a single chip, you need very expensive, highly advanced equipment, you need very skilled workers, and you need a lot of time. It can take literally months to build a single chip, and that is assuming you have the facilities and the expertise to do so.

So it is not hyperbole to say that there are life-or-death consequences to a reliable semiconductor supply chain, which is why this has been such a high-priority item on a bipartisan basis here in the Senate.

The U.S. Innovation and Competition Act included $52 billion to fund this program and ensure that, once again, we could maintain a strong supply of advanced semiconductors. That legislation, which included an emergency appropriation, passed by a vote of 68 to 32, which is pretty impressive these days with the polarization that we are all dealing with--a strong, bipartisan vote.

Unfortunately, the momentum that bill had ended when it got to the House of Representatives. The Speaker of the House had other priorities, and months and months went by. Our House colleagues said they wanted to pass their own version of this legislation, and they have every right to do so, but time is not on our side, and they need to act quickly. Every day that goes by is a day that China inches ahead of the United States and that we fall further behind.

We need to get this funding out the door and to begin that construction of these fabs, which take a considerable amount of time to build, underway as soon as we can.

In a year's time, Senator Warner and I introduced the CHIPS Act, it became law, and the Senate funded the program we created. We are not ordinarily known for our speed, and the quick timeline is indicative of how urgent this problem really is.

I don't have any excuse for the House's failure to address this issue for 7 months, but now it sounds like they are beginning to think about addressing it.

Well, I can understand why the process would take so long if the House was actually engaged in a bipartisan negotiation, but, unfortunately, it looks like they are going to pass a partisan bill with no Republican support because they were not included in the discussions. The Democratic committee chairmen refused to consult with the Republican ranking members, and it looks like they are going to produce a partisan bill.

Well, that bill I do not believe would pass the U.S. Senate. The House bill contains $8 billion for an unaccountable U.N. climate slush fund, which has provided more than $100 million for the People's Republic of China.

What we are talking about--what we should be talking about--is countering threats from China, not helping China.

The partisan bill from the House has also added provisions related to immigration, from creating new types of visas to removing green card caps. Immigration is an important issue. We ought to be talking about it. We ought to be doing something about it, but not on a partisan basis.

These changes should not be tacked on to this legislation at the last hour. They need to be debated and marked up by the appropriate committees and given the sort of careful consideration that they deserve.

The House bill also includes additional handouts to favorite political constituencies, from massive slush funds to burdensome new labor requirements. Organized labor would be the big winner in the House bill, but not rank-and-file Americans.

It is not just what is in this bill that is a problem. I am talking about the House bill, now. It is what was left out. The bill's trade title is completely inadequate. It extends and expands trade adjustment assistance, but it completely excludes trade promotion authority. We know that trade promotion authority is critical to negotiating strong trade agreements without lengthy delays.

So I regret and I am very disappointed that the House has wasted available time, particularly when this vulnerability to the semiconductor supply chain is so grave and so urgent.

We have a responsibility to secure our most critical supply chains while creating thousands of high-paying American jobs and boosting our global competitiveness. So I hope that once the House does pass a bill that we quickly form a formal conference committee in order to make the final product look a whole lot like the Senate bill that we passed with strong bipartisan majorities.

Let me just comment in closing that I am a big fan of the Wall Street Journal. I read it or, at least, parts of it every day. But I was concerned that a treatment of this legislation in the Wall Street Journal editorial yesterday--actually, it was this morning--either was unclear or provided misinformation about the importance of these semiconductors.

The title of the editorial was ``The Be More Like China Act.'' And suffice it to say, they were not fans of either the House or the Senate bill.

But they made this statement. They said: ``[T]he Pentagon is already providing incentives to make advanced chips in the United States, and [Taiwan Semiconductor] is building a $12 billion plant in Arizona.''

To the second issue, the reason why Taiwan Semiconductor Manufacturing Company is building a fab in Arizona is in the expectation that the Senate will pass this $52 billion incentive program, and through the Department of Commerce, grants will be made which will level the playing field. When it comes to the cost of building these fabs in the United States, it costs roughly 30 percent more to build a manufacturing facility, a fab, in the United States than it does in Asia, which is the reason why they are mainly there.

But I think what the Wall Street Journal was talking about was something very different than what we are trying to do here with reshoring manufacturing of semiconductors.

The Wall Street Journal, I believe, is talking about the Department of Defense's zero-trust semiconductor purchasing model. In other words, we needed a trusted foundry to build semiconductors for our most important weapon systems and aircraft, like the F-35, and so this is not a manufacturing facility that will supply the semiconductors that are needed by our growing economy and for national security. This is a very narrow, targeted program at the Department of Defense, and, like I said, the Department of Defense's secure foundry or trusted supplier program is not a substitute for what we are trying to do here.

Finally, let me say that there is broad bipartisan agreement about how important it is that we get this CHIPS Act passed.

Secretary Raimondo, the Secretary of Commerce, whom I have come to know and come to work with and respect, said to CNBC yesterday: ``The U.S. is dangerously dependent on Taiwan's semiconductor manufacturing, which is in a fragile situation, which I have tried to describe.''

I agree with Secretary Raimondo. This is something that the President wants done. This is something the Senate has spoken to and passed on a broad bipartisan basis, and this is something that we need to do without further delay.

So I hope the House will pass the bill if for no other reason than to give us a bill that we can conference the Senate bill with. But in the end, the Senate bill needs to be the template for what is ultimately done by the conference committee and what is ultimately passed by the U.S. Congress.

BREAK IN TRANSCRIPT

Mr. CORNYN. Madam President.

I would say to my friend from Colorado, I am a noncombatant on this issue. I didn't hold his bill. But I know Senator Lee does have an amendment, I believe, he wants to offer, and certainly he wants to be here to participate in the discussion and vote on the bill.

BREAK IN TRANSCRIPT

Source