-9999

Floor Speech

BREAK IN TRANSCRIPT

Mr. WARNER. Mr. President, today we took another giant step on something that has been a lot harder than it should have been and could have been because it actually started last June when I rose before this body--June of 2021--to speak about the critical need to pass the U.S. Innovation and Competition Act, as it was known back then, USICA, in order to shore up U.S. investment in research and development and manufacturing of critical technologies.

On this bill--a few name changes later, and, unfortunately, more than a year later--I rise again before this body to express my strong support for this revised CHIPS+ legislation--that we just cleared an important hurdle for over the last hour--and urge my colleagues to pass this bill as quickly as possible so we can get it out of the Senate, get it over to the House, and get it to the President's desk.

We cannot afford to waste any more time because this funding sends a message that the United States is putting a strong down payment on maintaining our edge in the global technology race and preventing global supply chains from being weaponized against the United States or, for that matter, against our allies.

Over the past few years, China has continued to increase investments in its domestic industries and, particularly, in areas that confer long-term strategic influence. This includes the semiconductor industry, which I have been particularly focused on over the past few years.

Now, let me be clear. When I talk about China--let me be clear--my beef is with the Communist Party of China, Xi Jinping, and their approach. It is not with the Chinese people; it is not with the Chinese diaspora. As a matter of fact, when people don't make that distinction, you may play exactly into the CCP's agenda that somehow these are all simply anti-Chinese activists. These are not. These are activities against the Government of China and, particularly, the Communist Party of China.

Coming back to semiconductors: Semiconductors, often called chips, are the backbone of our modern lives. They can be found in literally everything with an on-and-off switch: from cars and trucks to washers and dryers to smartphones and laptops. Chips are an essential component in so many of the devices we use today.

The growth in chips is going to be exponential. Many have fought and talked about the whole notion of the internet of things. The internet of things require devices that are connected to the internet. Obviously, autonomous driving would be one example. For every connection, there needs to be a center, most of those requiring a semiconductor chip.

Unfortunately, looking backwards, for many years, American semiconductor companies led the world in both design and manufacturing of this critical technology. But the truth is, our leadership has languished. In recent years, we continue to lose ground, particularly not just to China but to East Asian markets in total.

As a country, we have gone--from 1990, when we produced literally 37 percent of all the chips in the world, to today--in the whole field of microelectronics, we are down to about 12 percent.

On the other hand, China has ramped up its investment in chips, providing an estimated $200 billion in financial support between just 2015 and going forward projection up to 2025. Chinese orders for semiconductor manufacturing equipment rose 58 percent in 2021 in the midst of the COVID crisis. China has a goal to produce at least 70 percent of its use of semiconductors in the country by 2030.

The truth is, it is not just China. This is global competition. Japan recently passed a $6.8 billion investment package that will fund innovative chip manufacturing, as well as research and development. South Korea, which has also been one of the great leaders in this movement for it, has similar-type investments.

Unfortunately, one of the challenges we face is the country or the entity that has evolved some of the fastest has been Taiwan, where, unfortunately, we now rely on many of the most cutting-edge, leading- edge chips coming out of the Taiwan.

As we have seen with President Xi's aggressive--at least indications, about trying to subjugate Taiwan--when we think of it in the context of the Russian-Ukraine battle, the notion that could take place beyond what it would do to the democracy that exists in Taiwan, what it would do in terms of that critical semiconductor production--it would cause not only a recession but depression around the world.

It is not just South Korea, Japan, and Taiwan. India has recently passed legislation investing $30 billion in their domestic electronics manufacturing industry, with $10 billion of that dedicated to chips manufacturing and display manufacturing.

The truth is--and this is one of the things I think was the great irony--is that when I spoke about this bill 13 months ago, then, obviously, the Senate, with the leadership of the Presiding Officer and others, we actually passed this bill back in July of last year. Our passage of that bill and raising the expectation that America was going to really get in the game, set off alarm bells, not only in terms of what is coming out of Asia but from some of our allies in Europe.

The truth is, European bureaucrats, particularly coming out of Brussels, are not normally viewed as moving with a great deal of speed. But because we have taken now 12 months to actually get our act together and get this bill to this stage of passage, we have seen European countries--Germany, for example, has already selected 32 semiconductor projects and put $12 billion in draft investments. And even our friends in France recently announced a major U.S. global foundry investment in France.

This has proven out--the lack of investment by the U.S. has had a huge impact. From 2010 to 2020, only 17 major semiconductor plants-- they call them fabs, manufacturing fabs--were built in the United States. Over that same time, we have seen 122 built elsewhere around the world. And the handful of major projects announced in the last year as a direct result of our efforts a year ago to say we are going to put our money where our mouth is in terms of these kind of investments-- major facilities in Ohio, Arizona, and elsewhere, candidly, are very much at risk at this point, unless we can get this legislation to the President's desk.

Right now, the truth is: The cost of new fabs is 25 percent to 50 percent higher in the United States; and that is partially due to the enormous financial incentives offered by our competitive ventures.

The truth is, in a perfect world, we wouldn't want governments subsidizing some of these investments. We don't live in a perfect world. We live in a real world where competitors like China and even our allies around the world are making investments, candidly, that on a per capita basis even make this investment by the United States seem relatively small.

Many ask, so why is it so important for the United States to maintain investment in semiconductor production when on a lot of accounts, the PRC--China--is several generations behind? Because the truth is, U.S. semiconductor firms--and firms in the adjacent areas of lithography, packaging, and metrology--still lead the world.

I can tell you, as chairman of the Intelligence Committee, I can tell you unequivocally that the Communist Party of China and the PRC is acutely aware of that gap and aggressively are working, not just to close it, but to eventually leapfrog the United States and our allies to lead in chip production.

As a matter of fact, just over this past week, there was an extraordinary story coming out of Bloomberg that indicated that the Chinese may have already moved dramatically forward in terms of 7- nanometer production. For those aware, if that is true, that could have a huge, huge effect. We should expect that because last year, President Xi announced a $1.4 trillion commitment through 2025 to develop advanced technologies, not only in chips, but in next-generation wireless networks and artificial intelligence--technologies that will candidly determine who is not only the economic but the security winner of the 21st century.

I firmly believe that this is the time of technology competition across the series of domains, and China has a plan they articulated in their China 2025 document. We, in this country, are still trying to determine what are those domains.

The truth is, semiconductors--which enable advancements in artificial intelligence or high-performance computing, hypersonics, and everything else, again, with an on-off switch--is arguably the centerpiece of President Xi's effort to ultimately control innovation system development.

Meanwhile, many of the key ingredients to U.S. historical success, including Federal support for R&D, investment in basic research and support for advanced manufacturing, have declined over the last 20 years. Why? I am focusing on chips and the 5G and beyond. Here, there is a whole series of components in this legislation we have advanced today that includes beefing up R&D, advanced manufacturing, and other critical areas.

It brings me down to my closing comments before I turn it over to the Senator from Nevada. That is why the $52 billion in funding for CHIPS for America Act--a bipartisan effort my friend, Senator Cornyn and I, along with Senator Schumer and Senator Cotton--we have been working on this, literally, for years, way beyond the 13 months, when I rose on this topic 13 months ago--is so important and why a parallel effort also in this bill to catalyze U.S. and allied innovation in a more diverse and resilient telecommunications ecosystem is so virtually important.

I would also note this simply isn't an economic competitiveness or security issue. We know, as we see it play out right now in terms of supply chains--vis-a-vis Russia and Ukraine, the notion of cutting off advanced semiconductors to Russia will have a huge effect on Russia's military capacity. We also know, as well, this will be a jobs bill in terms of these fabrication facilities and research all across America. And, candidly, as we know, there are literally thousands of cars that already have been produced by American auto manufacturers that are sitting, not getting into the market because they don't have the chips to make the cars actually operate. Over the long haul, bringing that supply chain back here will ultimately deal with inflation issues, as well.

We cannot be held hostage on this critical issue. Most of the focus has been on chips, as appropriate. But this bill also makes important investments in the future of wireless telecommunications. In many ways, this issue first came to the forefront, not on chips, but a few years back--I say this as a former wireless telecom guy--when a Chinese company, Huawei, suddenly started to dominate the market. We raised concerns about Huawei. Many of our allies and others said: That is fine; what is your alternative? What is the Western alternative?

I think we were a little bit slow on making the case; although, now, virtually every nation that invested in Huawei equipment has realized national security concerns that are literally in the process of ripping and replacing that equipment.

We have still got more to do. Huawei penetrated some of our markets in the United States. So this bill that has been called CHIPS also includes funding for the bipartisan Utilizing Strategic Allied Telecommunications Act, or the USA Act, which fosters U.S. innovation in the race for 5G by providing $1.5 billion to invest in Western- backed alternatives to, again, Chinese equipment providers, like Huawei but also ZTE.

This is a bill that, again, I was proud to work on with many of my Intel colleagues, Senator Burr and Senator Rubio. It will also stand up a new Public Wireless Supply Chain Innovation Fund to spur movements toward open-architecture software. That would allow us to fund innovative, ``leap ahead'' technologies in the domestic mobile broadband market.

That approach plays to U.S. strengths, like software and network virtualization, and it means that we will have a wider set of firms, including American, with healthier balance sheets competing against these state-sponsored Chinese vendors, because one thing that has been clear over the past two administrations, our anti-Huawei message, or the things that finally moved, would have moved a lot quicker if we had had other U.S. and Western alternatives.

Again, I will close now. As the chairman of the Senate Intelligence Committee, I see examples every day of how China is doubling down on its pursuit of advanced technologies that I think will define the 21st century, and in many ways, the United States has started to fall behind.

Fortunately, it is not too late to change that narrative or to change that result. With the right investments, like the ones that have been provided in this legislation, we can unleash the ingenuity of the American people. We can reinvigorate American innovation and improve our national security while setting the country up to lead the way on technologies that will define our future.

We need to get this passed as quickly as possible, and then I strongly, strongly urge our colleagues in the House to pass it as well and get it to the President's desk.

I do want to thank my colleague from Nevada, who has been a leader on this legislation, as well, and knows the importance of getting this done.

BREAK IN TRANSCRIPT

Source