Commerce, science and transportation committee, topics included critical mineral supply chains, manufacturing of Semiconductor Chips, workforce shortages and Rural Broadband access. The hearing runs two hours and 40 minutes. [inaudible conversations] good afternoon, the Senate Commerce committee will come to order. I think my colleagues who have been in this room for many hours already today doing double duty today on aviation hearing and very important conversation about the chips in science act, which are committee played a big role in, needless to say are committee has been working diligently on a lot of transformational policy but while we are waiting for our colleague here i think i will thank senator wicker again for his work on chips in science act. People may not remember but this committee, dont know how many were processed. It was in the hundreds. Might have been in the 300s but i definitely believe a regular order process is good for the institution, good for the debate about science and hopefully people will continue in todays hearing to understand that, that much of the debate that maybe wasnt as clear in a public perspective as it was to all of us working behind the scenes daily to try to figure this policy out. We will go ahead and get started and when my colleague gets here, hopefully he will be here soon, we will let him make his Opening Statement but welcome, Gina Raimondo and director sethuraman panchanathan. Thank you for being here with us today. I also want to mention that apparently theres a fema Emergency Alert test so everybody in the room gets an alert message, that is what that is about, dont be concerned about it but Everybody Knows it is going to go off. A little more than a year ago Congress Passed the landmark chips in science act, a clear commitment to americas competitiveness and the idea that we need to innovate in the United States and clearly we were doing a lot of innovation, we were publishing a lot but needed to translate more, patent more, help our Manufacturing Base be competitive for the future. Our two witnesses led on the delivery of those commitments and are here to tell us about their substantial progress their agencies are making during the first year of the implementation of this act. Weve already seen the chips in science acts per 200 billion of private Sector Investment from semiconductors across the country to other investments and the federal Government Role is so important because the commitment to the Chips Program office in the department of congress is generating 500 statement of interest from Companies Looking at new projects and innovations so we will have a chance to ask the secretary about those proposals, building resiliency and longlasting semiconductor ecosystems in the United States. Since we had a chance to discuss this earlier, im pretty sure we are going to hear today about how we are never going to be in this problem as it relates to legacy shifts, that we are going to have a good plan to help on our supply Chain Development that our dod stature is going to continue to be on the cutting edge of chips and i think you re going to tell us that the diversity of applications means that ecosystem we are trying to restore and grow is alive and well. Weve also seen nsf rollout innovation engines, more than 43 million going to planning grants across the country. I love that the director, during our efforts, coined the phrase innovation anywhere, opportunity everywhere. Thats what we were looking for in this legislation both in the spreading of the amount of funding and diversifying a workforce opportunity across the United States. In the state of washington, spokane company reducing energy decarbonization, we all know that innovation and expertise helps us generate jobs and tackle our most pressing problems and we know that what we have to do on this committee besides hearing from these Witnesses Today is push our colleagues to fully fund aspects of chips and science that werent funded. The committee asked two previous attempt at competitive bills fell short, the funding was not realized because we face an economic downturn and the other just in our very first effort on competitiveness, making the mark from the appropriations perspective, foreign adversaries are not waiting, we know that our strategic, also moving ahead. We need to make this investment to what we would say d risk the supply chain and we are innovating and translating our science faster. As we look to the future we need to Work Together to ensure the us remains competitive in the global marketplace on issues like Artificial Intelligence, 5g wireless systems and quantum computing and that will require the United States to do a couple things, the ability of the us to produce chips to support this innovation, that is why the advancement with the applications is so important, second, we need a resilient supply chain that can withstand disruptions like we saw in the past either geopolitical tensions, natural disasters, global pandemic, whatever, we need a more dependent supplychain and a workforce that is well skilled and technical, to the types of technology being produced today. Are blue this is one of the biggest gaps left to be addressed in the chips in science act, we have some money for Semiconductor Training and workforce advancement and some on the science side through nsf but a lot more needs to happen the United States, the jobs of tomorrow are here today but the skill level of the workforce to do them is not. The more that we can take advantage of the job creation that happening by marrying that up, the something the secretary knows from her days as governor, the more we can streamline that and mary that up together, the more this engine is going to rev. Today, us manufacturer only 12 of the worlds semiconductors compared to where we were in the 1990s at 30 so the question today is are we seeing the right level of investment to make a return to the market share we think is important . My guess is we are going to hear from the private sector, and the robust response to the program, were going to hear that the investments want to be in the United States so i think we cant emphasize enough how important it was to bring this manufacturing back, consumers sarkar prices raise as much as 40 , truck manufacturers not able to get semiconductors, were not able to shift products or, supplychain, resiliency created deadlocks for other industries and impacted National Security. So i hope that we will all Work Together on better tools for the future, i have some questions about that in the question and answer period, but the Semiconductor Industry today is facing a gap of 67,000 people by 2030, thats just semiconductors. We in my state related to stem have a gap of 60,000 workers across various sectors, not just semiconductors so clearly we need to make investments in the Scholarship Program and in the stem apprentices and workforce for tomorrow, to realize all this investment thats now being made in the United States of america. Welcome to our witnesses, i will turn it over to senator cruz for his Opening Statement. Thank you for calling this important hearing, and welcome Gina Raimondo, sethuraman panchanathan, for being here today. Semiconductors drive our modern economy. Cell phones in cars and supercomputers and medical devices, these integrated circuits have been integrated into our daily lives. Before 2,020, however, when we suddenly couldnt get enough of them most of us probably didnt 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. We rely on these chips for Consumer Electronics in cars but also just about every [beeping] i think your time is up. [laughter] we have an emergency in semiconductors. [laughter] thats a first. In 45 years i think our first witness is a semiconductor. You done . No. [laughter] [beep] [laughter] as i was saying. [laughter] with great trepidation i observe the just about every advanced Weapon System in our military rely on semiconductors 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, and aiding in the chips in science act. Parts of this law like the fabs act which are cosponsored and enthusiastically support provided tax credits to incentivize chip investment in the United States which the final bill also included a whopping 52 billion in direct subsidies from taxpayers that in my view would predictably lead to government bureaucrats picking winners and losers. At worst this kind of industrial policy can be right with political interference and waste and at best it is often done poorly and then efficiently. Thats why i alternately voted against the bill displayed containing a number of things i strongly support. We are already seeing a number of these concerns realized. When i speak to companies in texas, many of them bemoan how the Biden Administration has imposed extraneous nonstatutory conditions on receipt of taxpayer support. Commerce isnt just asking if youve got the best technology or the cheapest manufacturing process. Instead, the bureaucrats want to know if you have proper plans to subsidize childcare or to support affordable housing. Adequately engage with labor unions. Are your suppliers sufficiently diverse. None of these topics are critical to the fundamental question of whether you can build the best ship at the lowest price. Maybe these issues are relevant but does anyone think officials in washington know better than the indigenous years and investors behind these projects. Moreover none of these were included in the law. They nonetheless have been attached by the Biden Administration to try to enact by regulation things they dont have the votes to pass through congress. As many Commerce Committee republicans noted in the letter we sent to Gina Raimondo in march, this attempt at backdoor Progressive Social policy will only make thomistic to production more expensive, less competitive and more reliant on taxpayer subsidies over private investments. More recently, an area of major concern has been the environmental requirements, and the potential for this environmental process law to drive up Compliance Costs for manufacturers and significantly slow new construction. That is why senator mark kelly and i let a bipartisan amendment, the National Defense authorization act to exclude the overwhelming majority of chips funded semiconductor projects. I want to thank Gina Raimondo for your support on that effort and for explicitly endorsing our amendment during your house testimony last month. Gina raimondo, weve also had good conversations about the importance of a strong us chip industry. We both want to see americas innovative capacity store and we agree that using taxpayer funds appropriately is immensely challenging. Fortunately, we are seeing a path forward. Texas boasted established ecosystem of innovators, worldclass universities and permissive Regulatory Environment that enables companies to grow and thrive. As a result weve already attracted 61 billion in private new Semiconductor Investments and created 8,000 new jobs making texas the center of us Semiconductor Manufacturing. Texas has a storied history and the invention and production of semiconductors and we are proud to help lead Americas Semiconductor renaissance and i would encourage the Commerce Department to look to the model in texas and see how to make this broader effort more successful. Its worth noting the other half of the chips in science act, director sethuraman panchanathan, the nsf does substantial work subs expanding our scientific knowledge and it is important work but im deeply concerned over what appears to be the politicization of nsf funded science and the feedback loop and scientific stagnation this is created. Im especially disturbed by recent reports that nsf has, the tunes of tens of millions of dollars been funding projects on hunter, quote, populist narratives and socalled, quote, miss and disinformation which seems like little more than funding the pseudoscience of censorship so i look forward to hearing from both our Witnesses Today on how they are implementing this important law. Taxpayers the put a lot of skin in this game will we all owe it to them to get it done. We start now with Gina Raimondo, welcome, cant imagine what a busy time it is for you in the organization that is implanting this act, we appreciate your time being here today. It is my pleasure to be here today, thank you chairwoman and Ranking Member cruz, and how we are implanting this historic legislation and im so pleased to be here with poncho, fantastic nsf director. I want to begin by taking a second to share my condolences with senator feinsteins family. She was a pioneer and role model for so many women like me. I wanted to take a second to say that. Because of your hard work in large part due to you and bipartisan support of the committee, the Commerce Department now has the honor, responsibility to invest 60 billion in our domestic Semiconductor Manufacturing and research and development and i concur its an enormous responsibility and massive amount of taxpayer dollars. We open the application process in february a few months after you passed the bill. We have since received 500 statement of interest from 42 states for manufacturers large and small. They outlined proposals to manufacture chips and the relative equipment and materials here in the United States. Importantly, all of the 500 statement of interest we received over 100 applications or preapplications. In the last two weeks we finalized and put out the guard rail to protect Us Government investment and bolster our National Security and developing our Chips R D Program to meet the unique challenges of building a sustained r d to manufacturing pipeline the centerpiece of these efforts is the Semiconductor Technology center which we expect to launch this fall. A great deal of activity since the bill was passed and all of that research and develop and work we are doing in collaboration with the nsf. The chips in science act also authorized two new programs, the Tech Hub Initiative and recompete which we are administering through epa. We received 400 applications for the tech hub grant. It is unbelievable. I have never seen anything more oversubscribed. Later this fall eda will launch, will make the announcement of the designation and then also invite an opportunity for additional funding for implementation. Similarly we are investing 200 million in the Recompete Pilot Program to spur Economic Activity in geographically diverse and economically distressed communities across the country. Thanks to your work in the chips in science act we are making historically bold and Strategic Investments that will strengthen our national and Economic Security. If we are successful, when we are successful United States will become the premier destination in the world where new chip architectures can be invented in our research labs, designed for applications, manufacturing at scale by welltrained, wellpaid American Workers and packaged in the United States, so it is a tremendous piece of work that we have, great progress since the bill has passed, we will answer any questions related to that, before i close, just to mention, how stressed we were about the possibility of a Government Shutdown and how troubling it was to come within hours of that shut down, so thank you for working hard to make sure that did not happen. It goes without saying china, russia, iran are not shutting down, the work we are doing in the chips act is essential to our N