Tech, Business Groups Urge Congress Against Allocations in Addressing Chip Shortage

WASHINGTON, DC – A coalition of technology and business trade associations urged the U.S. Congress to guard against unprecedented market interference through direct mandates of “set-asides” in new semiconductor manufacturing capacity as the United States considers policies to address both long-term U.S. competitiveness and a short-term chips shortage. In a letter to congressional leadership, organizations warn that the market-distorting effect of “setting aside” a portion of new capacity for any single, private sector would artificially constrain supply, hurt competition, and raise costs for consumers and American taxpayers.

“So long as market demand to manufacture at all nodes remains, there is no reason to anticipate the elimination of existing manufacturing capacity for legacy chips, the stated rationale for ‘set-asides,’” they wrote. “The market-distorting effect of ‘setting aside’ a portion of new capacity for legacy chips for any single, private sector would squeeze the remaining chip-consuming industries into the remaining new manufacturing capacity, artificially constraining supply. The competition among the rest of America’s chip-consuming industries for this artificially tightened chip supply will translate into higher costs for companies and their customers, including American taxpayers. At the same time, any benefactor of a ‘set-aside’ would be insulated from supply and demand availability and price pressures.”

The groups underscored the need for U.S. government leaders to support the diversification, expansion, and resiliency of the U.S. semiconductor supply chain, and reiterated their support for President Biden’s $50 billion funding request for the CHIPS for America Act. They requested the leaders ensure the incentives made available through the appropriations of these programs be accessible to all U.S. and multi-national chip manufacturers who meet the eligibility requirements enacted into law last year.

Signatories include USTelecom | The Broadband Association, Alliance for Digital Innovation, Associated General Contractors of America, BSA | The Software Alliance, CTIA, GovEvolve, the Information Technology Industry Council (ITI), Security Industry Association (SIA), Software and Information Industry Association (SIIA), and Tech CEO Council.

Read the letter HERE.