U.S. Commerce Secretary Gina Raimondo joins Yahoo Finance's Julie Hyman to discuss the semiconductor shortage, the chances Washington will help the problem, and gas prices.
And I know you've been in close and pretty constant contact with lawmakers even up to now. So let's talk about that. What is the latest? What are you hearing from those lawmakers? And are you expecting a vote on this bill by Tuesday?
Just in the past few weeks alone we've heard from several American semiconductor companies who are expanding in other countries, in France and in Germany and in South Korea because those countries are moving faster than the United States and providing these incentives. So this is really a time's up moment. There's broad bipartisan support for this.
This week I briefed the House and the Senate, and there's broad bipartisan support. There seems to be no argument that this chips bill is necessary for our national security, for our ability to compete with China. And it's time for Congress to do its job and vote yes next week.
That had also been a sticking point for Senate Republicans. Now, even though I know that mentions discussion of this is a setback for the White House, is it in some ways a blessing in disguise for the chips bill, specifically because it might make it easier to get through?
As it relates to chips, again, these things are apples and oranges. Like right now, the United States buys 90% of the most sophisticated chips from Taiwan. From Taiwan. Every piece of military equipment that protects the citizens of this country requires semiconductors. We buy almost all of them from Asia. They are tested in China. They purchased from Taiwan.
We have a bill before us, which allows us to change that, which allows us to secure our future and make it so that we can protect ourselves, compete with China, and by the way, create hundreds of thousands of jobs in America. There is no way anyone should vote no on that next week, particularly because it has such bipartisan support.
I mean, there have been Republican members of Congress who have sponsored this bill and worked on it for years. In the case of Senator Cornyn from Texas, he has worked on this bill for years. He understands and cares about the national security ramifications. It's really inexcusable to vote no next week because of some political jockeying or looking for leverage on an unrelated bill.
JULIE HYMAN: Well, it might be inexcusable, but that doesn't mean it wouldn't happen of course. We have seen this happen in Washington time and time again. So when all is said and done, what is your level of confidence that this bill reaches the president's desk by August?
GINA RAIMONDO: High, very high. There's a lot of momentum. Just yesterday, I was with probably 80 members of the Congress or more in the secure briefing. A couple of days ago, there were 50 members of the Senate in a similar secure briefing. And when you hear the dialogue, you know they have the sense of urgency, you feel that they are coalescing around getting it done, getting it done soon, focusing on the chip's component first, passing that first, and letting the conference continue.
So there'll be many twists and turns and ups and downs, I promise you that. I'm willing to say two things. Number one, it's going to get to the president's desk this summer. Number two, there'll be a lot of ups and downs between now and when it does.
JULIE HYMAN: You mentioned that the projects that are going on in other countries. And of course, there are also projects that are impending, imminent here in the United States. What really caught our eye at Yahoo Finance over the past week or so was Pat Gelsinger of Intel tweeting a picture-- I'm sure you're quite familiar with this-- of the site in Ohio, where Intel is set to break ground and build a plant. But he's waiting for you guys in Washington. So I'm curious what conversations you're having with him and with other leaders in the industry as you're trying to push this across the finish line.
GINA RAIMONDO: He's not alone. You know, he isn't alone. A couple of weeks ago, there's a silicon wafer company called Global Wafers, which made an announcement of a $5 billion expansion in Texas. But they said if chips doesn't pass this summer, then instead they'll do it in South Korea and a number of situations.
And the reason, to be clear, it's not that they don't want to wait, because they can't wait. Semiconductor demand, demand for these chips is through the roof. And these companies are already at 95% capacity, so the only way to meet demand is to add, you know, build new factories. And they have to do it now because it takes a couple of years to build them.
So that's why we are at this truly urgent point. And if Congress doesn't act before they go home for the August recess, I think you will see these companies expand in other countries and then we're finished. They're only going to make one $20 billion investment in a facility. It's either in America or in Japan, South Korea, France, Germany, Italy.
And we have a moment now to pass this in the next couple of weeks, and it's a win for America. And if we don't, it's a win for China. Make no mistake about it. The Chinese government is lobbying against this bill. They know it's bad for them and good for America. And that's why when you ask me, will it get done? I do believe at the end of the day, these members of Congress are Patriots, they are folks who understand what's at stake. And I think they'll do the right thing.
JULIE HYMAN: One of the companies, just one of the examples that you just cited, GlobalFoundries announcing that it's going to expand in France in particular. With the time that it has taken to get this bill done, has there already been irreversible damage to this push to expand the semiconductor industry in the United States?
GINA RAIMONDO: Yeah. That is such a great question. I would say no. That is a loss that you highlighted. Certainly Intel's big plans in Germany is a loss. Yet I wouldn't put it in the irreparable category. However, if summer comes and goes and this bill doesn't pass, then these companies will move out in other countries. And that will be irreparable.
Because what happens is, when the manufacturing facilities get built someplace else, then the whole supply chain and the talent supply chain also goes somewhere else. You know. all the startups, the suppliers, the chemical companies, the substrate companies, the talent supply will all go to cluster around the big manufacturing facilities. And at that point, that will be truly irreparable. And so that's what's at stake here.
JULIE HYMAN: I also wanted to ask you a little bit about the cyclical nature of the semiconductor industry, right? It is an industry that notoriously goes through sort of gluts and then contractions. And you mentioned the demand that we have seen. Taiwan Semiconductor earlier this week came out and said its revenue is rising.
But at the same time, it's cutting its budget on capital expansion, on projects because it's anticipating a slowdown in demand. We're seeing that in things like hits to demand for consumer electronics here in the United States. So are you concerned at all that we'll get these big projects underway and two years in, there then is a big contraction in the industry and some of the investment from the industry really dries up.
GINA RAIMONDO: No of all the things I worry about, that is not what I worry about for a few reasons. Number one, demand is up 17% in the last two years and is going to be up 20% to 25% in the next three years. Right now, these factories are at 90 plus capacity. And here's the scariest thing, customers, if you talk to medical device customers, defense contractors, they have like three or four days inventory of these chips, which is dangerously fragile.
So there are thousands of kinds of chips in different products and such. So it may be that demand in certain areas goes down and demand in other areas goes up, but due to the fact that every company now is a digital company, is a tech company, and you need semiconductors for every technology and anything that's digitized, no, I don't worry about that. Demand is just going to continue to rise.
JULIE HYMAN: I want to switch gears in our final few moments here because another big topic that we are talking a lot about is what's going on with the price of oil. Of course, President Biden traveling to Saudi Arabia to try and hammer out some kind of agreement there. We've been hearing reporting that it looks like we are not going to get any kind of announcement on that necessarily out of this meeting.
But in your discussions with companies, obviously, it's not just the increase in oil prices-- yes, they have come down-- that's a problem. It's the volatility in oil prices and trying to manage around that and fuel prices. What are you guys working on on that front in terms of trying to find some stability here?
GINA RAIMONDO: Yeah, thank you. So as you say, gas prices have gone down steadily over the past month. And we of course welcome that. We know folks are having a hard time with gas prices. The President is working on increasing domestic supply as well as working with our allies to increase, you know, not global supply.
And I think when you see the increased supply relative to demand, that will go a long way towards tempering the volatility. And of course, in the long run, the solution is to move as fast as possible away from fossil fuels so that we frankly, are never again in this situation.
JULIE HYMAN: Secretary Raimondo, so good to get some time with you, and look forward to continuing to keep in touch on this chips question and all of the semiconductor projects that are in the pipeline. Thank you so much.
GINA RAIMONDO: Thanks. Have a great weekend.
JULIE HYMAN: You too.
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