Mar 9, 2022 - World

Russian sanctions drive renewed focus on Asia semiconductor reliance

Illustration of a US flag made of semiconductor chips.
Illustration: Shoshana Gordon/Axios

While congressional leaders work to shore up support for $14 billion in aid to Ukraine, some lawmakers have sent a letter urging a fresh focus on China — and America’s reliance on semiconductors from Asia.

Why it matters: International sanctions on Russia, and President Biden's announcement Tuesday banning the import of its oil, gas and coal, demonstrate how any country that's too reliant on one export — or import — can be brought to its economic knees by adversaries.

  • Senate Democrats say America needs to control its own supply lines.

In early February, the House passed a $335 billion bill — including $52 billion to bolster the semiconductors industry — with only one Republican voting "yea."

  • In a letter Tuesday, some 140 lawmakers, led by Sens. Mark Warner (D-Va.), John Cornyn (R-Texas) and Reps. Doris Matsui (D-Calif.) and Michael McCaul (R-Texas), urged congressional leaders to move quickly on the $52 billion for semiconductors on its own.
  • They called on leaders to “immediately begin negotiations to allow votes in the House and Senate as soon as possible.”

What they are saying: “But for Ukraine, we maybe would have gotten through at this point,” Warner told Axios. “But Ukraine is one more reason why we need to make this investment.”

  • “This is about jobs. It's about security. It's about the technology race with China," Warner added. "On all three, I think this is a topic that Democrats ought to be talking about.”
  • House Majority Leader Steny Hoyer (D-Md.) told Axios: “We’re working very hard on it."
  • "Everything is taking a back seat to the omnibus and Ukraine right now.”

Driving the news: President Biden is hosting industry leaders and a pair of governors at the White House on Wednesday to call on Congress to pass legislation to turbocharge manufacturing in crucial industries and make America less susceptible to outside shocks, like the pandemic and Russia's invasion of Ukraine.

  • Officials have blamed bottlenecks caused by COVID-19, and most recently the disruption to the oil industry caused by Russia's invasion of Ukraine, for soaring inflation at home.

The big picture: In June, 19 Senate Republicans voted in favor of the United States Innovation and Competition Act [USICA], raising the prospect of an easy bipartisan victory for Biden.

  • But after the House debated its version of the bill, the COMPETES Act, Republican support slipped away.

The bottom line: Democrats still expect Congress to pass a $150 billion to $350 billion bill to turbocharge the domestic semiconductor industry, but they're hesitant to provide a timeline.

  • “Ukraine gives us more momentum on USICA because we need to make American manufacturing stronger,” Sen. Brian Schatz (D-Hawaii) told Axios.
  • “The arguments dovetail perfectly,” he said. “It's just there's a difference between the important and the time sensitive.”
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