ICYMI: Sen. Cantwell on CNBC Squawk Box Talking What CHIPS and Science Act Means for Americans, Ahead of President Biden’s Signing
August 4, 2022
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U.S. Senator Maria Cantwell (D-Wash.), Chair of the Senate Committee on Commerce, Science, and Transportation, joined Andrew Ross Sorkin on CNBC Squawk Box on Wednesday, August 4, 2022, to talk about the importance of the CHIPS and Science Act investments, ahead of next Tuesday’s signing by President Biden.
“One thing is very clear, the United States needed to invest in chips and science, so that our advanced manufacturing was competitive in a global economy. And so we're sending that bill to the President's desk, and he'll be signing it on Tuesday,” said Sen. Cantwell. “We're now asking states to prepare to train and skill a workforce so we can be the leader in design and manufacturing of advanced chips. And I think you know very well, how important that is to new products, to services and [to] national security.”
WATCH Sen. Cantwell on CNBC Squawk Box
“What Americans woke up to in the supply chain crisis when they couldn't get appliances, when they couldn't get a car, when inflation right now is being driven by the fact that people can't even get a used car,” Sen. Cantwell said, on why Americans understand the impact of the semiconductor shortage on their daily lives. “I think Americans were like: No, no, no, this is as essential as wheat. We want to make an investment. We want it made here in the United States. And we want to be the leaders in the next generation of technology.”
“I think the response from Americans, they're getting excited,” she added. “They like competition. They like to be in the fight, and this bill is giving them the tools to do so.”
Sorkin: The nearly $300 billion CHIPS and Sciences Act is currently awaiting President Biden's signature. And [through its] passage in Congress, our next guest held three classified briefings to make sure her fellow lawmakers understood the national security and economic implications of the U.S. semiconductor shortage. She says these meetings are ultimately what led to Republicans getting on board.
Joining us right now is Washington Democratic Senator Maria Cantwell, she Chairs, of course, the Senate Commerce Committee. Good morning to you, we appreciate you being with us.
Cantwell: Good morning.
Sorkin: Let's talk about this bill, because there's been lots of controversy, bipartisan agreement in the end to move forward, but on both sides of the extremes of the Republican and Democratic parties. There were folks who said, why are we subsidizing this industry? And so I will start there.
Cantwell: Well, we just had this conversation on your show about where's the economy of the future. And as a business person, former business person, I can tell you, when times are uncertain, you basically think about what is your core investment, and what do we need to do moving forward.
One thing is very clear, the United States needed to invest in chips and science, so that our advanced manufacturing was competitive in a global economy. And so we're sending that bill to the President's desk, and he'll be signing it on Tuesday. So we're now asking states to prepare to train and skill a workforce so we can be the leader in design and manufacturing of advanced chips. And I think you know very well, how important that is to new products, to services and [to] national security.
Sorkin: What are we going to do to hold companies that get these subsidies to account? And I asked because we've seen, I mean, there's a laundry list of companies that have gotten subsidies from taxpayers over the years, Foxconn being just one example, Solyndra being another where people look and say, you know, what they didn't live up to their side of the bargain and this was wasted dollars.
Cantwell: Well, in this case, we already know from estimates by CBO and GAO that the investment we're making now, within five years will be paid back and doubled. But we have a Commerce Secretary who has the ability in this legislation to claw back funds from these companies.
When you think about chip manufacturing and fabrication, it cost about $20 billion to build one of these facilities. And so we have shrunk from 36% of the market down to 12[%]. And if we do nothing will continue to shrink to the point where the United States is just not a competitive place to make this huge technology advancement.
So the notion that we have to be competitive on an international basis, there was just no choice. Now we have to make sure that these provisions, where we're generating some incentive to make this manufacturing move, really encapsulate here in the United States, that we will be watching and the language that says you can't develop other places. You can't do stock buybacks for a period of time. This is what will help make this legislation successful.
Sorkin: What do you make of the rumblings that we're hearing that some of these chip companies are going to be asking you for even more, not necessarily from the federal government, but maybe, but from states and others?
Cantwell: Well, it is an interesting dilemma given where Korea and Taiwan and other places have been, and now Europe in incenting this sector.
But we know this, we need millions of jobs in this area, when you think about the ancillary impacts to say, the automotive industry or the electronics industry or the grid itself.
So we know that we need to skill and train people here in the United States. But the science part of this bill gives ample investment through the National Science Foundation for that workforce training and skilling to happen. What we're looking for as partners on the ground, universities, states, organizations, business organizations, who want to train and skill those to do chip fabrication as fast as possible.
Sorkin: When people think about industrial policy, one of the questions that comes up is if in fact the companies that are on our screen are wildly successful, and we have to hope that they are wildly successful.
There is going to be a moment potentially and I'm curious what you would think, if we go back and look at the value creation that's been created at those companies for their shareholders, whether taxpayers are supposed to look at that and say, “that's great. That's what we wanted all along. Or we should have had a piece of that?”
Cantwell: Well, I just was asked by The Economist the other day, what did I think would make the decision about whether this was successful, and [what] I still believe is whether the United States will be leading in the design of chip fabrication for the future.
The design is everything. And we're at a point where we're not saying Moore's Law is over. But it's getting trickier to add the complexity, and to reduce the power costs to all the things that we were trying to do. Just look at automobiles and AI, you have to have sensors all over the place, you have to interpret that so you can have driverless cars. Chips are a key part of that. Or look at Qualcomm and what they're doing with 5G.
So the information age is going to continue to unfold and the United States has to lead in the next generation chips that are going to allow those advancements to take place. If we do that, the rest of this, we will see many, many, many job growth numbers. And right now we're seeing these companies, you'll be having them on your show that are going to be announcing expansions in the next month.
Sorkin: Where's the line, though, for you? And when I say where's the line, there's going to be other companies from other industries that I imagine start knocking on your door saying, “you know, what, what about us? We're clearly important to national security issues in our country.”
Cantwell: Yeah, it's true. It's tricky, for sure, Andrew, and if you want to have me back sometime and have a big, big discussion about this, I'm happy to come on board, because obviously, I heard everything you said about the airlines during our airlines situation.
But I would say that, you know, that paid a dividend. We are further ahead of Europe and everybody else, because we put something in place in a short period of time. Did I want to do it just that way? No. But all of us got together here and made a decision, and it is paying dividends for the United States and the growth that we're seeing in the economy in the rebound. So, that was that was a smart policy.
In this particular example, yes, our hand is being forced by the fact that let's just say for example, Intel or others did not make the right R&D investment decisions and fell behind, and all of a sudden, Korea and Taiwan put their foot on the gas. And basically, all of a sudden we look up and we're way behind as it relates to manufacturing. So, we had to make a decision.
But what I think Americans woke up to in the supply chain crisis when they couldn't get appliances, when they couldn't get a car, when inflation right now is being driven by the fact that people can't even get a used car, then I think Americans were like: No, no, no, this is as essential as wheat. We want to make an investment. We want it made here in the United States. And we want to be the leaders in the next generation of technology.
I think the response from Americans, they're getting excited. They like competition. They like to be in the fight, and this bill is giving them the tools to do so.
Sorkin: Senator Cantwell, we appreciate you joining us. We appreciate you being such an astute watcher of Squawk, given that you know about our views about airlines. And we hope to have you back down for a larger conversation about all of it. Thanks.
Cantwell: I'm serious. It's an important discussion. I don't really believe that this is an industrial policy. This is about a smart investment. And so I am so glad the President is going to be signing it on Tuesday.
Sorkin: Well, we look forward to see you again. Thank you.