AWS, HPE, Other IT Vendors Back $50B Call For U.S. Chip Production

The call to subsidize domestic semiconductor manufacturing and research with $50 billion in funding comes from a new coalition of companies that includes Amazon Web Services, Apple, Cisco, Google, Hewlett Packard Enterprise and Microsoft. It’s also backed by IT distributors Avnet and Arrow Electronics. In addition, telecom giants AT&T and Verizon back the funding that was previously authorized — but not appropriated — by Congress.

The call to subsidize U.S. chip manufacturing efforts with $50 billion in government funding has gained the backing of a new coalition of semiconductor companies, IT vendors and other companies that are in close orbit of chipmakers like Intel, AMD and Samsung.

The Semiconductors in America Coalition on Tuesday called for U.S. congressional leaders to appropriate $50 billion in incentives and research initiatives for domestic semiconductor manufacturing as part of the CHIPS for America Act, which was approved earlier this year. The new group builds on calls by the Semiconductor Industry Association and President Joe Biden to fund the measure with $50 billion.

]Related: Intel CEO Pat Gelsinger’s ‘No-Brainer’ Plan To Solve Chip Shortage]

The coalition includes several major IT and telecom vendors that rely on silicon for their products and services: Amazon Web Services, Apple, AT&T, Cisco, Google, Hewlett Packard Enterprise, Microsoft and Verizon. The semiconductor members include AMD, Arm, Broadcom, Intel, Nvidia, Qualcomm, Samsung, SK Hynix, Western Digital, Xilinx and several others. Additional members include Avnet, Arrow Electronics, General Electric and Honeywell.

In a Tuesday letter to congressional leaders Nancy Pelosi (D-Calif.), Chuck Schumer (D-N.Y.), Mitch McConnell (R-Ky.) and Kevin McCarthy (R-Calif.), the Semiconductors in America Coalition said U.S. technology leadership is at question as foreign governments provide major subsidies to semiconductor research and manufacturing efforts overseas.

The result, the group said, is that it is “20-40 [percent] more expensive to build and operate a fab in the U.S. compared to overseas.” The U.S. has also fallen from its peak of global semiconductor manufacturing share of 37 percent in 1990 to 12 percent today, the group added.

“Semiconductors are crucial to the technologies of today and tomorrow, including aerospace, automotive, cloud computing, medical devices, telecommunications, and more,” the group wrote in its letter. “Semiconductors also underpin many of the technologies and systems vital to our national security and critical infrastructure.”

However, the group urged the federal government to “refrain from intervening” in the current global chip shortage and allow the industry to work out any issues. Instead, the group hopes that the $50 billion in funding for domestic chip production would make supply chains more resilient in the future.

“Manufacturing incentives funded by Congress should focus on filling key gaps in our domestic semiconductor ecosystem and cover the full range of semiconductor technologies and process nodes — from legacy to leading-edge — relied on by industry, the military, and critical infrastructure,” the group said.

Dominic Daninger, vice president of engineering at Nor-Tech, a Burnsville, Minn.-based high-performance computing system integrator, told CRN that the growing call to subsidize domestic chip manufacturing and research reflects the fact that the systems and services provided by many of these large IT and telecom providers are “close to qualifying as infrastructure” now.

“You can look at them as the electronic highways of our society these days,” he said.

However, Daninger said, when Congress approves funding to expand U.S. chipmaking capacity, lawmakers should exercise caution in ensuring that any incentives benefit the industry at large as opposed to improving the bottom line of individual companies.

“A lot of those companies are doing just fine as far as a balance sheet,” he said. “It takes a lot of supervision, which I would hope would be put into a structure like that. We don’t need to make the billionaires bigger billionaires.”