Cornyn, McCaul urge incentives for semiconductor production

Shortage of the tiny chips has driven up car prices, but Sen. Cornyn says that’s just “symptom” of larger problem

San Antonio – From phones, to military jets, to cars, semiconductor chips are ubiquitous in the global economy, as a pandemic-driven shortage has highlighted.

However, as two members of the Texas delegation pointed out Tuesday during a roundtable discussion at a San Antonio manufacturer, the chips are also largely produced overseas - something they hope to change.

While participating in a roundtable discussion at Tower Semiconductors, Tuesday morning, Sen. John Cornyn (R-Texas) and Rep. Mike McCaul (R-Texas 10) beat the drum for incentives to support the domestic production of semiconductors. One of the most visible signs of the global shortage of the chips has been the car market, where a shortage of new cars, which need numerous chips to be built, has translated into a corresponding shortage of used cars, too.

However, Cornyn calls that a “symptom” of a larger problem related to the supply chains of the chips, which could be compromised by a pandemic, natural disaster, or military conflict.

“This is maybe just the leading edge of waking us up to the problem,” Cornyn said of the effect on the car market.

The United States has only 12% of the world’s semiconductor manufacturing capacity, according to the Semiconductor Industry Association, compared to 37% in 1990.

The lion’s share of the most sophisticated chips are manufactured in Taiwan, Cornyn pointed out “And given China’s aggressive acts, rhetoric, and actions in the South China Sea relative to Taiwan, that ought to concern all of us.”

The U.S. Senate has already passed a bill with $52 billion to help spur more domestic semiconductor development and manufacturing, in a bipartisan vote in June.

The bill is now in the House of Representatives, where McCaul hopes to add refundable tax credits into the mix.

“It’s very cost intensive on the front end to build a fabrication plant. This would help refund anywhere from 25 percent to 40 percent of that initial investment up front,” McCaul said.

Toyota Motor Manufacturing Texas President Kevin Voelkel also took part in the roundtable. Though Toyota as a whole had been affected by the chip shortage, Voelkel said the Tundras produced at the San Antonio plant had not seen a slowdown.

“Because Toyota has a deepened supply chain and a diversified supply chain that we learned from the 2011 tsunami, we were able to work with our suppliers and down into their tiers to be able to move things around, to be able to support. But this is only the beginning. And if we don’t do something, it’s going to continue to exacerbate and get even worse,” Voelkel told media afterward.

About the Authors:

Garrett Brnger is a reporter with KSAT 12.

Luis Cienfuegos is a photographer at KSAT 12.