Sen. Cruz: We Owe It To Taxpayers To Get Domestic Chips Manufacturing Right

Hearing

"Thank you, Chairwoman Cantwell, for calling this hearing. And thank you, Secretary Raimondo and Director Panchanathan, for being here today.

Semiconductors drive our modern economy. From cell phones and cars to supercomputers and medical devices, these "integrated circuits' have been integrated into our daily lives. Before 2020, however, when we suddenly couldn't get enough of them, most of us probably did not realize just how big a role these chips play. It became very quickly apparent that, in terms of economic and national security, just how dependent--and vulnerable --we are on semiconductors. Yes, we rely on these chips for consumer electronics and cars, but they are also in just about every advanced weapon system in our military's arsenal--and most of them are not made in the United States.

Recognizing this, there was a flurry of legislative activity to onshore and nearshore semiconductor manufacturing last Congress, culminating in the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act. Parts of this law, like the Facilitating American-Built Semiconductors (FABS) Act which I cosponsored, provided tax credits to incentivize chip investments in the United States, and I was proud to support them. The final bill, however, was loaded with a whopping $52 billion in direct, subsidies from taxpayers that, in my view, would only lead to government bureaucrats picking winners and losers. At worst, this kind of industrial policy is rife with political interference and waste and, at best, it's done poorly and inefficiently. It's why I ultimately voted against the bill despite it containing a number of things I support.

We are already seeing a number of these concerns realized. When I speak to companies in Texas, many of them bemoan how the Commerce Department has imposed extraneous, non-statutory conditions as a receipt of taxpayer support.

Commerce isn't asking if you've got the best technology or cheapest manufacturing process. The bureaucrats want to know if you have proper plans to subsidize childcare or support "affordable housing.' Have you adequately engaged with labor unions? Are your suppliers sufficiently diverse?

None of these topics strike me as critical to the fundamental question of whether you can build the best chip at the lowest price. Maybe these issues are relevant, but does anyone actually think officials in Washington know better than the engineers and investors behind these projects?

Moreover, none of these strings were included in the law, but have nonetheless been attached by this administration to try and enact by regulation things that could never make it through Congress. As many Commerce Committee Republicans noted in the letter that we sent to you in March, this attempt at back-door progressive social policy will only serve to make domestic chip production more expensive, less competitive, and reliant on taxpayer subsidies over private investment.

More recently, an area of major concern has been the onerous environmental requirements under the National Environmental Policy Act (NEPA) and the potential for this environmental process law to drive up compliance costs for manufacturers and significantly slow new construction. That's why Senator Mark Kelly and I led a bipartisan amendment to the National Defense Authorization Act that would exclude from NEPA the overwhelming majority of CHIPS-funded semiconductor projects. Secretary Raimondo, I want to thank you for your support on that effort and for endorsing our amendment during your House testimony last month.

Secretary Raimondo, we have had good conversations about the importance of a strong U.S. chip industry. We both want to see America's innovative capacity soar, and we agree that using these taxpayer funds appropriately is immensely challenging. Fortunately, states like Texas are showing us a path forward here.

Texas boasts an established ecosystem of innovators, world-class universities, low taxes, and permissive regulatory environment that enables companies to grow and thrive. As a result, we have already attracted $61 billion in private new semiconductor investments and created 8,000 new jobs, making Texas the center of U.S. semiconductor manufacturing. Texas has a storied history in the invention and production of semiconductors, we're proud to help lead America's semiconductor renaissance, and I would encourage you and the Commerce Department to look to our model when looking at how to make this broader effort successful.

Finally, it is worth noting the other half of the CHIPS and Science Act. Director Panchanathan, the National Science Foundation (NSF) does substantial work advancing basic science that helps expand our scientific knowledge, and that's important work. But I am deeply concerned over the increasing politicization of NSF-funded science and the feedback loop and scientific stagnation this is creating. I am also especially disturbed by recent reports that NSF has, to the tune of tens of millions of dollars, been funding projects on how to counter "populist narratives' and so-called "mis and disinformation,' which seems like little more than funding the pseudo-science of censorship.

So, I look forward to hearing from both our witnesses today on how they are implementing the law. The taxpayers have put a lot of skin in this game, and we all owe it to them to get it right."

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