[Senate Hearing 117-845]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-845

MADE IN AMERICA: THE FUTURE OF AUTOMOTIVE INNOVATION AND SEMICONDUCTOR 
                                 CHIPS

=======================================================================

                             FIELD HEARING

                               BEFORE THE

  SUBCOMMITTEE ON SURFACE TRANSPORTATION, MARITIME, FREIGHT, AND PORTS

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION
                               __________

                             MARCH 28, 2022
                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation
                             
                             
                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                             


                Available online: http://www.govinfo.gov
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
54-920 PDF                WASHINGTON : 2024                   
                
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                   MARIA CANTWELL, Washington, Chair
AMY KLOBUCHAR, Minnesota             ROGER WICKER, Mississippi, Ranking
RICHARD BLUMENTHAL, Connecticut      JOHN THUNE, South Dakota
BRIAN SCHATZ, Hawaii                 ROY BLUNT, Missouri
EDWARD MARKEY, Massachusetts         TED CRUZ, Texas
GARY PETERS, Michigan                DEB FISCHER, Nebraska
TAMMY BALDWIN, Wisconsin             JERRY MORAN, Kansas
TAMMY DUCKWORTH, Illinois            DAN SULLIVAN, Alaska
JON TESTER, Montana                  MARSHA BLACKBURN, Tennessee
KYRSTEN SINEMA, Arizona              TODD YOUNG, Indiana
JACKY ROSEN, Nevada                  MIKE LEE, Utah
BEN RAY LUJAN, New Mexico            RON JOHNSON, Wisconsin
JOHN HICKENLOOPER, Colorado          SHELLEY MOORE CAPITO, West 
RAPHAEL WARNOCK, Georgia                 Virginia
                                     RICK SCOTT, Florida
                                     CYNTHIA LUMMIS, Wyoming
                       Lila Helms, Staff Director
                 Melissa Porter, Deputy Staff Director
       George Greenwell, Policy Coordinator and Security Manager
                 John Keast, Republican Staff Director
            Crystal Tully, Republican Deputy Staff Director
                      Steven Wall, General Counsel
                                 ------                                

  SUBCOMMITTEE ON SURFACE TRANSPORTATION, MARITIME, FREIGHT, AND PORTS

GARY PETERS, Michigan, Chair         DEB FISCHER, Nebraska, Ranking
AMY KLOBUCHAR, Minnesota             JOHN THUNE, South Dakota
RICHARD BLUMENTHAL, Connecticut      ROY BLUNT, Missouri
BRIAN SCHATZ, Hawaii                 DAN SULLIVAN, Alaska
EDWARD MARKEY, Massachusetts         TODD YOUNG, Indiana
TAMMY BALDWIN, Wisconsin             RON JOHNSON, Wisconsin
TAMMY DUCKWORTH, Illinois            SHELLEY MOORE CAPITO, West 
JON TESTER, Montana                      Virginia
RAPHAEL WARNOCK, Georgia             RICK SCOTT, Florida
                                     CYNTHIA LUMMIS, Wyoming

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on March 28, 2022...................................     1
Statement of Senator Peters......................................     1

                               Witnesses

Steve Dawes, Director, UAW Region 1D.............................     4
    Prepared statement...........................................     6
Garrick C. Francis, Vice President, Federal Affairs, Alliance for 
  Automotive Innovation..........................................    21
    Prepared statement...........................................    23
Robert J. Rathert, Sr. (Jay), Senior Director, Strategic 
  Partnerships, KLA..............................................    29
    Prepared statement...........................................    31
Glenn Stevens, Executive Director, MICHauto......................    34
    Prepared statement...........................................    36

                                Appendix

Response to written question submitted by Hon. Amy Klobuchar to:
    Robert J. Rathert, Sr. (Jay).................................    55

 
                            MADE IN AMERICA:
      THE FUTURE OF AUTOMOTIVE INNOVATION AND SEMICONDUCTOR CHIPS

                              ----------                              


                         MONDAY, MARCH 28, 2022

                               U.S. Senate,
 Subcommittee on Surface Transportation, Maritime, 
                                Freight, and Ports,
        Committee on Commerce, Science, and Transportation,
                                                       Detroit, MI.
    The Subcommittee met, pursuant to notice, at 10 a.m., in 
the Fleetwood Conference Rooms, Detroit Regional Chamber, 1 
Woodward Ave #1900, Detroit, Michigan, Hon. Gary Peters, 
Chairman of the Subcommittee, presiding.
    Present: Senator Peters [presiding].

            OPENING STATEMENT OF HON. GARY PETERS, 
                   U.S. SENATOR FROM MICHIGAN

    Senator Peters. Welcome. It is a great--memorable first day 
for everyone to be back. So thanks again to everybody for being 
here. Well, this committee will now come to order. And I think 
I want to begin by just explaining why we are here in Detroit. 
Last week, the Senate Commerce Committee had a hearing in 
Washington, D.C. about semiconductors and the role that they 
play in manufacturing and throughout our economy.
    But today we are bringing the Committee to Michigan because 
it is here where--this is not an abstract concept by any means. 
This is where our auto manufacturing, the chip shortage, and 
related challenges are all taking place each and every day. And 
this is where I think we will be, continue to lead into the 
future as well, from the Greater Detroit area and the State of 
Michigan.
    Our communities and families are steeped in these issues, 
and it is important to have this conversation among the people 
and the places that are actually experiencing them. Michigan 
established the American auto industry, transforming mobility 
in society, and quite frankly, built the American middle class 
that will continue leading for many years in the future.
    When Henry Ford introduced the first Model T on the 
assembly line in 1908, it did not contain a single 
semiconductor chip. It is a pretty amazing feat that he was 
able to do that without a semiconductor. Indeed, several more 
decades went by and that continued to be the case. But by the 
1970s, some cars started to contain a handful of chips.
    The role of chips in automobiles has ballooned since then, 
and today's modern cars have roughly 1,000 semiconductor chips 
or more, spanning very cost functions and technologies, and a 
little--I even have a few chips right here of how tiny--
imagine, this little, tiny wafer about the size of my 
thumbnail, the power that it has and the influence that it has, 
and then multiply that by a thousand throughout an automobile.
    And given these developments, it is no surprise that the 
global chip shortage following COVID-19 pandemic has 
devastated--impact--has had a devastating impact on the auto 
industry. This chip shortage has resulted in temporary layoffs, 
causing hardships for workers in an already challenging time. 
It also cut into one of the main drivers of our national 
economy, which is auto production.
    As President Biden has said, when he was visiting both Ford 
and General Motors here in Michigan, ``the future of the auto 
industry is electric,'' and I would make a small addition to 
that Statement that the future of the auto industry is 
electric, as well as connected, and autonomous. In terms of 
electrification, novel semiconductor technologies promise to 
reduce charging times, extend range, and enhance performance 
for electric vehicles, among others.
    And not only will electric vehicles help save our planet by 
combating climate change, they will also reduce our dependance 
on foreign energy sources and protect Americans from 
unpredictable gas prices.
    When it comes to connected and autonomous vehicles, 
semiconductor chips will power the artificial intelligence and 
other capabilities necessary to make self-driving cars a 
reality. This aspiration can't become a reality soon enough, 
because as we were talking about earlier, lives are literally 
at stake for this technology.
    Tragically, recent data shows that for the first time, for 
the first 9 months of 2021, an estimated 31,720 people died in 
car crashes. That represents a 12 percent increase over 2022. 
This is completely unacceptable.
    Achieving a future with zero fatalities on our roads will 
be a challenge and require many many approaches, and there is 
unfortunately no silver bullet to accomplish that. But 
autonomous vehicles hold great promise to play a major role in 
reducing injuries and deaths by eliminating human error and 
impaired driving, which are commonly involved in the vast 
majority of our crashes.
    These trends, electrification and autonomy, mean that in 
the coming years, chips will play an even greater role in the 
most essential functions of automobiles, both driving and 
powering the vehicle. So how do we prepare for this future and 
how do we prevent a repeat of problems like we have with the 
current chip shortage?
    Well, we need to shore up our supply chains by making 
things that we need right here in America. Pretty 
straightforward. The pandemic has certainly delivered a very 
painful message in that regard. Our supply chains are 
efficient, but they are not resilient. So when something goes 
wrong, problems pile up very quickly, depriving Americans of 
the things that they rely on, which--and which also contributes 
to rising inflation.
    And much of this is due to the fact that we are too reliant 
on overseas production. Through my role leading the Committee 
on Homeland Security and Government Affairs, in 2019, I 
released a report on prescription drugs. Among other issues, we 
found that America was over reliant on foreign manufacturers 
for prescription drug materials and that we were poorly 
prepared in the event of a future pandemic.
    That was in 2019. Shortly thereafter, we knew the pandemic 
did indeed hit us, and as we know, the Nation experienced 
challenges with PPE and other supply chain issues that limited 
our ability to have a quick COVID-19 response. And fortunately, 
companies such as General Motors, Ford, and Stellantis, as well 
as our auto suppliers, stepped up as they always step up, but 
they stepped up during the pandemic by repurposing their 
facilities to produce essential items like respirators and 
masks.
    But in the long term, we need a national strategy to 
protect our economy. Whether it has to do with chips for the 
auto industry or other essential goods and materials, we need 
to start securing critical supply chains, and this is something 
we are already doing when it comes to national defense. As a 
former naval officer in the U.S. Navy Reserve and now a member 
of the Senate Armed Services committee, I have fought to ensure 
that critical assets are made here in the United States.
    For example, Marinette Marine, which is right along the 
Michigan, Wisconsin border, is building Navy combat ships 
today, with about half of the workers coming from Michigan, 
employing hundreds of them. We would--I will say emphatically, 
we will never rely on the Chinese government to build our U.S. 
Navy warships. Never. That will never, ever happen. We will 
build them here in America with American workers to ensure in 
times of need our military is prepared.
    We must apply that same approach here with semiconductor 
chips, especially how they are central to everything from 
automobiles to lifesaving medical devices. And that is why it 
is imperative for the Congress to fully fund the CHIPS Act. In 
particular, we need to pass legislation that I led with Senator 
Stabenow that would provide $2 billion to incentivize domestic 
manufacture of so-called mature chips that are in short supply 
and that manufacturers of all kinds rely on, especially in the 
auto industry.
    This $2 billion is in addition to a $50 billion investment 
to ensure that the United States becomes the leader in the 
manufacture of advanced chips and other----
    [Technical problems.]
    Senator Peters. Is it on now? Good. Here is the bottom 
line, we must remain focused on making our supply chains 
resilient by manufacturing critical goods in America. And that 
includes semiconductor chips, but other supplies that are 
essential to millions of American jobs like the auto industry.
    So I look forward to hearing today's testimony about how we 
can buildup American auto manufacturing and our economy by 
leveraging American made chips and critical supply chains. And 
with that, it is now my pleasure to introduce our esteemed 
witnesses to provide their opening comments. Our first witness 
today is Mr. Steve Dawes, who is the UAW Region 1D Director.
    Mr. Dawes was elected to his current role in February 2020. 
And over the years, he has held many leadership roles at the 
UAW. He has dedicated his time and energy to helping his fellow 
autoworkers in creating opportunities for the next generation, 
and the Subcommittee is certainly very grateful for your 
service, Mr. Dawes, and your participation today. You are 
recognized for your opening comments.

       STATEMENT OF STEVE DAWES, DIRECTOR, UAW REGION 1D

    Mr. Dawes. Thank you. My name is Steve Dawes. Thank you for 
this opportunity. I am a UAW Region 1D Director. Region 1D 
serves a membership of 73 of the 83 counties in Michigan. I 
would like to start by thanking you, Senator Peters, for this 
opportunity to have this open discussion on semiconductor chips 
and the impact that it is having on our worksites. Mr. Senator, 
on behalf of myself and the Region 1D membership, thank you for 
your continued fight for our country and Michigan's working men 
and women.
    So to fully understand the chip issue as it relates to the 
automotive sector, one must really understand the function of 
the modern automobile. My references will primarily be related 
to General Motors heavy duty truck assembly in Flint, Michigan, 
but also runs parallel to almost all other vehicles.
    Today's truck functions and accessories are mostly fully 
run with electronics. Electronics control your brakes, 
steering, your fuel management, your radio, your lights, your 
cameras, your heated seats, your heated steering wheel, your 
speedometer, your dashboard, those are just a few. Many of 
these functions were historically operated with cables, shafts, 
mechanical methods.
    Now, each of these functions are controlled by a dedicated 
module. Each of these modules contain chips. These modules may 
contain one chip for the more basic function or many chips for 
the higher functioning module. So Senator has provided some 
pictures for you in your pamphlet right there. So the first 
picture you will see is actually a module of your XM radio and 
your radio in a vehicle.
    As you can see, from one, is the top view. Number two is a 
side view. And you can see the numerous electronic connectors 
that are hooked on to these things. Three is the bottom view. 
Again, another set of three connectors that come in and this is 
just for your XM radio to receive and communicate back to the 
computer. The second set of pictures are what we refer to as a 
BCM, which is the brake control module.
    In both pictures, you can see where there are seven 
different areas of connection and outputs in these modules, and 
many modules, again, retain the chips. The brake control module 
is one of the more important modules in a vehicle. The 
interface between the brake panel and the master cylinder, 
senses the amount of pressure from your foot to the brakes, it 
talks to the rest of the braking system, including anti-light 
brake function along with the wheel sensors, et cetera. It is a 
very complex piece of the vehicle.
    There are many more modules which contains chips. Some of 
the more important ones are actually the brake control monitor, 
the engine control module that controls all of the functions of 
the engine, the transmission control module that controls the 
shifting of your transmission. The engine performance is 
controlled by the engine control module, which also controls 
the governmental admissions standards that we meet that could 
not be met with the old mechanical way.
    So these are very critical, these modules and the chips 
that are contained in the modules. The chip and module numbers 
range differently from a mid-range truck. There is 
approximately 650 different electronic--electrical components 
in a vehicle. Sensor, switches, etcetera, approximately 30 of 
them are modules. Most of all the 651 components contain at 
least one chip. The 30 modules have a much more complicated 
architecture, as you can see in the picture, Senator.
    Each containing multi-semiconductor chips, some containing 
100 plus chips. 650 is an average component number but varies 
with the different building depending on your options, 
whatever. This dependency on semiconductor chips is actually, 
from talking to the engineers, is expected to double in the 
next 3 years. So very important on what our dependency are of 
these things.
    The shorter of these chips causes the company to make hard 
decisions determining where the limited supplies they receive 
go. Do they sell it to a car assembly or a truck and SUV 
assembly? And what options can be eliminated or installed at a 
later date? Adding options later leads to extra costs, and the 
lack of product availability leads to customer 
dissatisfactions. One of the last pictures I will show you is 
my wife just purchased the brand new Tahoe vehicle.
    As you can see as a high level, as I have highlighted, 
there is a credit, not equipped with heated steering wheel, 
includes later retrofit. Credit, not equipped with front and 
rear park assist, includes a later retrofit. So these are 
something that will have to be taken back to the dealership 
where somebody will have to spend hours and putting these 
modules into the vehicle, load them up to a computer, talking 
to the vehicle's computer, and so now the computer recognizes 
these.
    Where this button is on your steering wheel for your heated 
steering wheel is a blank spot. So that whole mechanism would 
have to be changed, which in turn costs money, and takes away 
from a company's profit, which in turn shares with their, in 
our case our employees, which then turns around to be money out 
into our community and taxpayers. At Flint Truck Assembly, we 
build about a thousand trucks a day.
    Every single one that is being built as we sit here today, 
along with the ones that will be built next week, next month, 
and beyond, there is someone waiting on that truck. Although we 
are able to produce the trucks, many which have already been 
built, they are waiting on the chips and modules to arrive and 
installed, and then delivered to the dealership. Chip shortage 
has continued to affect customer demands, the inability to 
produce certain vehicles--I will give an example, the Equinox.
    When General Motors decided to take the chips from the 
Equinox to move them to the truck and SUV assembly, it leads to 
idle plants and workers not earning expendable income, income 
that gets back into our economy. All this is proof that we need 
to build these chips right here in the United States of 
America, where we control the quality and are not held hostage 
by a foreign companies or delivery issues when somebody makes a 
wrong turn in a canal.
    We need a build here with proud Americans. That after the 
birth of the automakers, UAW in 1937--and Senator, you 
referenced how we were able to convert our factories to make 
ventilators and masks and PPEs and that type of stuff. Right 
after 1937, the birth of UAW, we also turned our factories and 
facilities into mass production of military planes, tanks, 
weapons, and other essential military products that had never 
been done in American history's before, mass producing of these 
military supplies.
    We were supplying those who were defending our freedom in 
World War II, a country where today the hard working men and 
women take a box of bolt in a raw sheet metal and build the 
highest quality vehicles around the globe.
    A country is willing and ready to produce the next 
generation of vehicles, but they want to do it here. They want 
to do it right here where we live and play. Right here, the 
place we love, the good old U.S. Mr. Senator, we stand ready, 
able, and with unlimited time tested talent. Let's build chips 
here, as well as the current technology for future technology. 
Let's do it here. Let's do it in our house.
    Thank you again, Senator Peters, for the most honorable 
opportunity to be here with you. And the rest of the panel, and 
you folks, thank you very much.
    [The prepared statement of Mr. Dawes follows:]

             Prepared Statement of Steve Dawes, Director, 
                   UAW Region 1D-Semi Conductor Chips
    My name is Steve Dawes. I am the UAW Region 1D Director. Region 1D 
serves the membership of 73 of the 83 counties in Michigan. I'd like to 
start by thanking Senator Peters for the opportunity to have this open 
discussion on semi-conductor chips and the impact they are having on 
our worksites.
    Mr. Senator, on behalf of myself and the Region 1D membership, 
thank you for your continued fight for our country and Michigan working 
men and women.
    To fully understand the chip issue as it relates to the automotive 
sector, one must understand the function of the modern automobile.
    My references will primarily be related to General Motors Heavy 
Duty Truck Assembly Operations in Flint Michigan but will also run 
parallel to other vehicles.
    Today's truck functions and accessories are almost fully run with 
electronics. Electronics control your brakes, steering, fuel 
management, radio, lights, cameras, heated seats, heated steering 
wheel, speedometer, dashboard-and those are just a few. Many of these 
functions were historically operated with cables, shafts, or mechanical 
methods. Now each of these functions are controlled by a dedicated 
module. Each of these modules contain chips.
    These modules may contain one chip for the more basic function or 
many chips for the higher functioning module.
    The shortage of these chips forces the company to make hard 
decisions determining where to send the limited supply they receive. Do 
they send them to car assembly or truck, SUV assembly? And what options 
can be eliminated or installed at a later date? Adding options later 
leads to extra costs and lack of product availability leads to customer 
dissatisfaction.
    At Flint Truck Assembly, we build approximately 1000 trucks per 
day. For every single one that is being build, as we sit here, along 
with the ones that will be built next week, next month, and beyond, 
there is someone waiting on those vehicles. Although we are able to 
produce their trucks, many trucks are waiting on the chips/modules to 
arrive and be installed.
    The chip shortage has and continues to affect customer demands. The 
inability to produce certain vehicles, such as the Equinox, leads to 
idled plants and workers not earning expendable income. Income that 
goes directly into our economy.
    All this is proof that we need to build these chips right here in 
the United States of America where we control the quality and are not 
held hostage by overseas companies or delivery issues because a ship 
makes a wrong turn in a canal.
    Build where proud Americans, after the birth of United Auto Workers 
in 1937, soon turned their factories into facilities mass producing 
military planes, tanks, weapons, and other essential military product, 
supplying those who were defending our freedom in World War II. A 
country where today, the hard-working men and women take a box of bolts 
and raw sheet metal and built the highest quality vehicles around the 
globe. A country that is willing and ready to produce the next 
generation of vehicles, but they want to do it here. Right here where 
we live and play. Right here, the place we love. The good ole' USA.
    Mr. Senator, we stand ready, able, and with unlimited, time-tested 
talent.
    Let's build chips here, as well as, all the current technology and 
future technology. Let's do it here. Let's do it in our house!
    Thank you again, Senator Peters, for this most honorable 
opportunity.

    Senator Peters. Well, thank you, Mr. Dawes. The photographs 
that you referenced in your opening statement, they will be 
without objection entered into the record as well.
    [The information referred to follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                                 

    Senator Peters. Our next witness today is Mr. Garrick 
Francis, Vice President of Federal Affairs at the Alliance for 
Automotive Innovation, also known as Auto Innovators. Mr. 
Francis joined the Auto Innovators in January 2021.
    He leads the Federal affairs team that serves as a liaison 
for the automotive industry to both policymakers and the 
Congress as a whole. Mr. Francis brings over 30 years of 
experience working in the transportation sector and other 
industries.
    Mr. Francis, welcome to the Subcommittee. You may proceed 
with your opening comments.

   STATEMENT OF GARRICK C. FRANCIS, VICE PRESIDENT, FEDERAL 
          AFFAIRS, ALLIANCE FOR AUTOMOTIVE INNOVATION

    Mr. Francis. Thank you, Senator. Chairman Peters, on behalf 
of the Alliance for Automotive Innovation and our members, I 
thank you for the opportunity to appear at this hearing today 
to share my perspective on how the auto industry in the U.S. is 
at the forefront of innovation and the importance of a robust 
and resilient supply chain that enhances U.S. competitiveness.
    We appreciate continued engagement with your office 
regarding the ongoing challenges in the semiconductor supply 
chain to develop supportive policies that can help ease those 
constraints and develop further domestic production capacity, 
including fully funding the authorized program for the CHIPS 
for America Act as encompassed in legislation in both chambers, 
including the bipartisan United States Innovation 
Competitiveness Act, or USICA.
    Maintaining and enhancing U.S. leadership in automotive 
innovation, however, is not just about the future of the auto 
industry. It is about the Nation's global competitiveness and 
economic security. Nations that lead the development and 
adoption of innovative technologies such as electrification, 
connectivity, and automation, as you referenced, will also 
shape supply chains, define global standards, and potentially 
reshape the international marketplace.
    And Senator, you mentioned the transformation in the role 
that Michigan played in the auto industry. Today we are on the 
verge of another transformation in the automotive industry in 
the United States that will fundamentally alter personal 
mobility. Through substantial long term investments in 
electrification, as well as advanced safety technologies, 
including automation, the industry is redefining motor vehicle 
transportation.
    Likewise, Government policies, investments, and programs 
must be modernized and transformed to reflect changes in the 
global marketplace and gaps in its supply chain. Globally, the 
automotive industry annual invest more than $125 billion in 
research and development, $20 billion more than the software 
and Internet technology industry.
    Roughly $24 billion of this annual investment occurs in the 
U.S., which supports alone 108,000 jobs, and harnesses the 
innovation and ingenuity of major automakers and their work 
force.
    Despite the industry's resiliency over the past 2 years, 
there is no question that lingering uncertainties associated 
with the COVID-19 public health emergency, along with recent 
global conflicts and other disruptions, will continue to stress 
supply chains and influence consumer trends, further straining 
the capital resources necessary to invest in future technology 
development.
    At a time when demand for semiconductors will continue to 
increase across all sectors, the auto industry represents one 
of the fastest and most substantial growth sectors for the 
semiconductor industry. As mentioned, semiconductors are used 
in a wide and growing variety of automotive electronic 
components that perform vital functions, vehicle control, 
safety, emissions, driver information, and others.
    The transformations underway across the auto industry are 
driving increased demand and the number and variety of 
semiconductors necessary for automotive production. Expanding 
and securing critical supply chains while developing new ones 
is a key factor in whether the U.S. will remain a leader in 
automotive innovation.
    Currently, the auto industry is facing substantial 
production losses stemming from capacity challenges across the 
semiconductor supply chain. Semiconductors, of course, are just 
one example of the type of investments needed to support U.S. 
leadership and job growth. But the challenges and opportunities 
before us are bigger than any one component part, policy, 
branch level of Government, or industry sector.
    For the U.S. to remain a leader in the development and 
adoption of transformational automotive technologies, we need a 
comprehensive national vision and strategy rooted in economic, 
social, environmental, and cultural realities. That 
comprehensive strategy must address several pertinent and 
pressing questions, what supply chains are available and will 
they need to change? What are the challenges to developing the 
U.S. supply base for specific new technologies?
    Senator, how are we preparing or repositioning the U.S. 
work force, including auto workers, suppliers, and related 
workers for these new technologies? What are the impediments to 
consumer adoption and affordability of advanced vehicle 
technologies, including electrification and automation? How do 
we address the challenges and barriers unique to certain 
communities, such as rural and disadvantaged, and ensure 
advanced vehicle technologies are accessible and beneficial for 
all Americans?
    What other industries, stakeholders, or sectors will be 
necessary to realize the potential of these important 
transformations? These are but a few challenging questions at 
the core of maintaining U.S. competitiveness and enhancing U.S. 
leadership in automotive innovation. Strategies must account 
for these realities, otherwise they could inadvertently harm 
the Nation's work force, limit consumer options, and jeopardize 
our Nation's future and global competitiveness.
    Our goal, Senator, in working with you is to avoid such 
outcomes by continuing to work collaboratively with 
policymakers and other stakeholders to maintain the U.S. global 
leadership in automotive innovation.
    So today, on behalf of the auto innovators and our member 
companies, I look forward to working with you, other Members of 
Congress, and the Administration to develop and implement 
policies such as those being discussed today, to realize the 
promise of cleaner, safer, smarter transportation future, while 
ensuring the U.S. leads automotive innovation for generations 
to come.
    So again, I appreciate being here today.
    [The prepared statement of Mr. Francis follows:]

   Prepared Statement of Garrick C. Francis, Vice President, Federal 
              Affairs, Alliance for Automotive Innovation
    Chairman Peters, Ranking Member Fischer and distinguished members 
of the Committee: on behalf of the Alliance for Automotive Innovation 
(Auto Innovators) and our members, I thank you for the opportunity to 
appear at this hearing today to share my perspective on how the auto 
industry in the U.S. is at the forefront of innovation and the 
importance of a robust and resilient supply chains that enhance U.S. 
competitiveness in the future of mobility, as evidenced by the current 
challenges associated with semiconductors.
    We appreciate continued engagement with your offices regarding the 
ongoing challenges in the semiconductor supply chain and supportive 
policies that can help to ease those constraints and develop future 
domestic production capacity, including fully funding the authorized 
programs from the CHIPS for America Act as accomplished in legislation 
in both chambers, including the bipartisan United States Innovation 
Competitiveness Act (USICA).
    Maintaining and enhancing U.S. leadership in automotive innovation, 
however, is not just about the future of the auto industry--it is about 
the Nation's global competitiveness and economic security. The nations 
that lead the development and adoption of innovative vehicle 
technologies, such as electrification, connectivity, and automation, 
will also shape supply chains, define global standards and, 
potentially, reshape the international marketplace.
    The Alliance for Automotive Innovation was formed in 2020 to serve 
as the singular, authoritative, and respected voice of the automotive 
industry in the United States. Our 17 manufacturer members produce 
nearly 98 percent of the cars and light trucks sold in the U.S., and 
our 21 supplier and value chain members are responsible for integral 
parts and technologies in these vehicles. In total, our industry 
employs roughly 10 million Americans, in addition to those who are 
employed in the technology and mobility sectors directly.\1\ We account 
for nearly six percent of our country's gross domestic product and 
represent our country's largest manufacturing sector.\2\
---------------------------------------------------------------------------
    \1\ Auto Alliance multi-industry contribution analysis: the 
economic impact of automotive manufacturing, selling, repairing, 
renting, and additional maintenance modeled using IMPLAN economic 
analysis data software, 2017 data year.
    \2\ Id; Bureau of Economic Analysis, Gross Output by Industry, 
https://apps.bea.gov/iTable/iTable.cfm?ReqID=51&step=1, Last accessed 
June 1, 2020; Bureau of Labor Statistics, Employment and Output by 
Industry, https://www.bls.gov/emp/tables/industry-employment-and-
output.htm, Accessed June 1, 2020
---------------------------------------------------------------------------
    Today, we are on the verge of a transformation in the automotive 
industry in the United States that will fundamentally alter personal 
mobility. Through substantial, long-term investments in 
electrification,\3\ as well as advanced safety technologies, including 
automation, the industry is redefining motor vehicle transportation. 
Likewise, government policies, investments and programs must be 
modernized and transformed to reflect changes in the global marketplace 
and gaps in the global supply chain.
---------------------------------------------------------------------------
    \3\ For the purposes of this document, the term electrification 
includes all zero emission or electric vehicles (``ZEVs'' or ``EVs''), 
including plug-in and plug-in hybrid EVs as well as fuel cell 
technologies.
---------------------------------------------------------------------------
    Globally, the automotive industry annually invests more than $125 
billion in R&D, $20 billion more than the software and Internet 
technology industry.\4\ Roughly $24 billion of this annual investment 
occurs in the U.S., which supports 108,000 jobs and harnesses the 
innovation and ingenuity of major automakers and their workforce.\5\ As 
part of this commitment to bring new cutting-edge vehicle technologies 
to the U.S. market, the auto industry relies on high-quality patents 
and the fair and reasonable licensing of standardized technologies.
---------------------------------------------------------------------------
    \4\ Strategy&, ``The Global Innovation 1000 Study,'' Data Download 
11/2/2020 https://www.stra
tegyand.pwc.com/gx/en/insights/
innovation1000.html?utm_campaign=sbpwc&utm_medium=
site&utm_source=articletext
    \5\ National Science Foundation, Info Brief, ``Businesses Reported 
an 11.8 percent Increase to Nearly a Half Trillion Dollars for U.S. R&D 
Performance During 2019,'' 11/18/21
---------------------------------------------------------------------------
    While the U.S. is well positioned to continue its long-standing 
leadership in automotive innovation, we cannot be complacent. Across 
the globe, nations are backing bold commitments with government 
investments and supporting policies. China has already established EV 
battery supply chain and manufacturing dominance. Likewise, Europe is 
responding by developing its own supply chains. Japan has made a bold 
commitment to support fuel cell technology advancements.
    China is moving aggressively to lead in safety technology 
advancements--including AVs. As evidenced by experience in other 
sectors--such as information and communications technologies--as well 
as the current EV battery supply chain, falling behind global 
competitors presents long-term risks to U.S. competitiveness and 
economic security.
    The industry's commitment to a cleaner, safer, and smarter future 
for personal mobility. remains on display as the nation--and the 
world--grapple with numerous `once in a generation' challenges at the 
same time. Through a worldwide pandemic and amid turmoil that is 
currently disrupting global supply chains, Auto Innovators' members 
continue innovating, building on decades of experience in precision 
manufacturing, supply networks, logistics, and purchasing to sustain 
and boost manufacturing, production and distribution in the U.S.
    Senators in both parties clearly understand the reality facing the 
automotive industry. Despite the industry's resiliency over the past 
two years, there is no question that lingering uncertainties associated 
with the COVID-19 public health emergency, along with recent global 
conflicts and other disruptions will continue to influence consumer 
trends and stress supply chains, like what our industry is currently 
experiencing with semiconductors, further straining the capital 
resources necessary to invest in future technology development.
    At a time when demand for semiconductors has and will continue to 
increase across all sectors, the auto industry represents one of the 
fastest and most substantial growth sectors for the semiconductor 
industry. Semiconductors are used in a wide and growing variety of 
automotive electronic components that perform vehicle control, safety, 
emissions, driver information, and other critical functions. In 
addition, there are many innovations underway in the automotive space 
that will define the future of safety and mobility--including 
electrification, automation, and connectivity--that are highly 
dependent on semiconductors. The transformations underway across the 
auto industry are driving increased demand in the number and variety of 
semiconductors necessary for automotive production.
    The chips that are generally used in vehicles are not the same 
chips that are used in consumer electronics devices. As with many 
defense and industrial control users, auto manufacturing relies on a 
wide range of chips, including a substantial number of mainstream--also 
known as mature, legacy, or lagging-edge--nodes. Further, the chips 
used in many automotive applications must be more robust and reliable 
than leading edge chips that are used in consumer electronics devices 
because they must withstand challenging internal and external 
environments for the useful life of the vehicle. These dynamics are 
reflected in the below chart from the USITC.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Expanding and securing existing supply chains, while developing new 
ones, is a key factor in whether the U.S. will remain a leader in 
automotive innovation. Currently, the auto industry is facing 
substantial production losses stemming from capacity challenges across 
the semiconductor supply chain. This shortage of semiconductors is an 
outgrowth of a confluence of factors: an unexpected and unprecedented 
eight-week shutdown of vehicle production across all of North America 
(and similar closures across the globe); a rapid increase in demand for 
consumer products as the global population adjusted life in response to 
the COVID-19 public health emergency; disruptions to semiconductor 
manufacturing and packaging around the world due to public health 
restrictions, natural disasters and a major plant fire; a resurgence in 
demand for personal transportation; and changes in consumer 
discretionary spending, among other factors. As a result of these 
supply chain constraints, numerous automakers have been forced to halt 
production and cancel shifts in the United States, with serious 
consequences for their workers and the communities in which they 
operate.
    Unfortunately, production forecasts in North America continue to be 
adjusted downward. In February 2021, industry was predicting that 
production would fall by 1 percent due to the chip shortage. By May, 
production forecasts had fallen by 5 percent. As 2021 drew to a close, 
forecasts had fallen by 21 percent for the year.\6\ According to 
industry analysts, motor vehicle production losses in North America 
exceeded 3 million vehicles in 2021 due to these disruptions.\7\ The 
data also suggests that North American production is being 
disproportionately impacted relative to other global markets. For 
example, North America, which historically produces around 17 million 
vehicles annually, lost more than 3 million units in 2021. In contrast, 
China, which historically produces more than 24 million vehicles, 
announced production losses of 1.9 million vehicles.\8\ While there is 
no industry consensus on how long the shortage will continue to impact 
production, and where, analysts estimate supply challenges are likely 
to persist into 2023.
---------------------------------------------------------------------------
    \6\ IHS Market, e-mails, ``IHS Markit Monthly Automotive Update--
February 2021,'' 2/16/2021 and ``IHS Markit Monthly Automotive Update--
December 2021, 12/10/21
    \7\ Automotive News, The latest numbers of the microchip shortage: 
Have factory cuts peaked?, December 20, 2021, available at https://
www.autonews.com/manufacturing/latest-numbers-automotive-microchip-
shortage-15 (Data supplied by Autoforecast Solutions, Inc.)
    \8\ IHS Market, e-mails, ``IHS Markit Monthly Automotive Update--
February 2021,'' 2/16/2021 and ``IHS Markit Monthly Automotive Update--
December 2021, 12/10/21
---------------------------------------------------------------------------
    These production shortfalls come at a time when sales inventory of 
vehicles in the U.S. is at an all-time low. In fact, in September 2021, 
light vehicle inventory fell below 1 million units for the first time 
in decades. This is a 64 percent drop in inventory from the prior year. 
Since then, vehicle stocks have started to make small, incremental 
gains, but remain 60 percent lower than a year ago and 74 percent lower 
than the same period in 2019. Likewise, days' supply is currently at 
24, compared to 78 in February 2019.
    Automakers and value chain partners are working diligently to 
navigate these current supply chain challenges. For example, OEMs are 
employing a range of strategies to manage available supplies, including 
shifting chip supply to meet consumer demand, reducing content in 
production vehicles, partially manufacturing vehicles and parking them 
for later completion, and other measures to manage the near-term supply 
constraints. At the same time, semiconductor production capacity is at 
all-time high, with more units shipped--across all sectors--in Q3 2021 
than any quarter in history.\9\ In addition, there is increased 
collaboration and engagement between OEMs and suppliers as companies 
seek to improve long-term planning within the semiconductor supply 
chain.
---------------------------------------------------------------------------
    \9\ https://www.semiconductors.org/q3-global-semiconductor-sales-
increase-27-6-year-to-year/
---------------------------------------------------------------------------
    Even as automakers and suppliers work to navigate the current 
landscape, there is an undeniable need to expand semiconductor 
manufacturing capacity and regional diversity to support a robust and 
resilient semiconductor supply chain that meets the growing demands of 
the auto industry, as well as other sectors of the economy. This 
requires a significant investment in, and sustained commitment to, 
building additional domestic semiconductor capacity--from mature to 
leading-edge--that meets the future needs of the auto industry in the 
United States. For this reason, Auto Innovators strongly supports full 
and robust funding for the programs authorized under the CHIPS for 
America Act as well as enactment of a semiconductor manufacturing 
investment tax incentive such as the one proposed in the FABS Act.
    Semiconductors, of course, are just one example of the type of 
investments needed to support U.S. leadership and job growth. But the 
challenges and opportunities before us are bigger than any one 
component part, policy, branch or level of government, or industry 
sector. For the U.S. to remain a leader in the development and adoption 
of transformational automotive technologies, we need a comprehensive 
national vision and strategy rooted in economic, social, environmental, 
and cultural realities. That comprehensive strategy must address 
several pertinent and pressing questions:

   What supply chains are available, and will they need to 
        change? What are the challenges to developing the U.S. supply 
        base for specific new technologies?

   How are we preparing or repositioning the U.S. workforce, 
        including auto workers, suppliers and related workers for these 
        new technologies?

   What are the impediments to consumer adoption and 
        affordability of advanced vehicle technologies, including 
        electrification and automation?

   How do we address the challenges and barriers unique to 
        certain communities, such as rural and disadvantaged, and 
        ensure advanced vehicle technologies are accessible and 
        beneficial to all Americans?

   What other industries, sectors or stakeholders will be 
        necessary to realize the potential of these important 
        transformations?

    These are but a few of the challenging questions at the core of 
maintaining U.S. competitiveness and enhancing U.S leadership in 
automotive innovation. Strategies must account for these realities, 
otherwise they could, inadvertently, harm the Nation's workforce, limit 
consumer options, and jeopardize our Nation's economic future and 
global competitiveness. Our goal is to avoid such outcomes by 
continuing to work collaboratively with policymakers and other 
stakeholders to maintain the U.S.'s global leadership in automotive 
innovation.
    Auto Innovators believes that realizing this future requires a 
sustained holistic approach with a broad range of complementary supply-
and demand-side legislative and regulatory policies. To that end, we 
have developed a series of proposals that match dynamic public policy 
with significant private investment and engagement. The foundational 
piece to all of these proposals is our Innovation Agenda which 
recognizes the key realities and factors necessary for the U.S. to 
remain the leader in automotive innovation. We have subsequently 
released more specific policy recommendations, to highlight critical 
technologies and the importance of a predictable policy environment to 
preserve and enhance U.S. leadership in a number of automotive policy 
areas as outlined below.
Accelerating Acceptance of Electric Vehicles:
    Electric vehicles are one of the best examples of why a 
comprehensive vision and strategy is crucial to building successful 
markets for the next generation of vehicle technologies. From 2017 
through 2030, Automakers and their battery partners will invest $91.8 
billion in the U.S. to electrify their products. On a global scale, 
automakers are planning to invest $515 billion globally over the next 
decade to bring exciting new EV models to market, including battery, 
plug-in hybrid, and fuel cell electric vehicles.
    Auto Innovators' Get Connected Electric Vehicle Quarterly Report 
shows steady growth in the EV sector. Through the fourth quarter of 
2021, EV sales comprised 78 different models and represented over 4 
percent of the light-duty market--up from 2 percent of the light-duty 
market in 2020. By mid-decade, IHS Markit predicts that there will be 
130 EV models available in the U.S.
    Even with this steady growth in EV market share, meeting the goals 
of automakers and policymakers alike, and achieving requirements in the 
EPA's final greenhouse gas emissions rule for model years 2023-2026, 
will require a significant increase in EV sales. However, with the 
right complementary policies in place, and a sustained national 
investment in those policies, the auto industry is poised to accept the 
challenge outlined by President Biden of driving new EV sales to 
between 40 and 50 percent of the market by 2030. To meet this goal, a 
comprehensive approach that includes investments and supportive 
government policies is needed with a focus on three key areas: consumer 
affordability and awareness; charging and hydrogen fueling 
infrastructure; and innovation, manufacturing, and supply chain.
    Auto Innovators and our member companies commend the bipartisan 
efforts that went into enacting the Infrastructure Investment and Jobs 
Act (IIJA). Notably, the $7.5 billion included in the law for electric 
vehicle charging and hydrogen fueling infrastructure is an important 
first step in jumpstarting public investment in a nationwide charging 
and hydrogen fueling network. Currently, there are 44,500 publicly 
available EV charging locations and 110,158 charging ports nationwide--
representing a 16 percent increase since January 1, 2021. While the 
$7.5 billion is a crucial investment in expanding availability of 
public charging stations, substantially more will need to be invested--
by both utilities and the public and private sectors. The bipartisan 
IIJA law also included supportive provisions for supply chains for 
clean energy technologies, including those related to battery 
manufacturing and recycling. These funding streams will certainly 
provide key components in supporting innovation and developing the 
necessary supply chains to support the expansion of EVs in the U.S.
    Auto Innovators remains committed to continuing to work with 
Congress, the Administration, and policymakers at all levels of 
government to craft the additional complementary policies necessary to 
make EVs more affordable for all consumers, further the development of 
charging and hydrogen fueling infrastructure, and continue to boost 
investment in the domestic EV supply chain to enhance U.S. leadership 
in developing the technologies to achieve a cleaner transportation 
future.
    In fact, as today's hearing examines American manufacturing and 
supply chains, the supply side represents one of the best opportunities 
to develop long-term and sustainable U.S. leadership in automotive 
innovation. Vital aspects of the EV supply chain require the 
manufacturing of batteries and battery components (critical minerals 
extraction, processing, battery cell production, end of life recycling) 
and fuel cell stacks. In 2019, Chinese chemical companies accounted for 
roughly 80 percent of the world's total output of advanced battery raw 
materials. Investments in tax incentives, grants, and loan programs for 
both R&D and manufacturing can help to provide the support needed to 
develop and bolster the U.S. supply chain and manufacturing capacity 
for EVs. Such programs will allow manufacturers to retool, expand, or 
build new facilities for the manufacture of light-, medium-, and heavy-
duty plug-in and fuel cell electric vehicles, and their batteries, fuel 
cells, components, and related infrastructure that will be key factors 
in driving automotive innovation in the United States for generations 
to come.
The AV Policy Roadmap:
    I would be remiss if I did not emphasize the potential that 
Automated Vehicles (AVs) have to increase the safety of our Nation's 
roadways by decreasing the number of motor vehicle crashes due to human 
error. They also hold promise to provide numerous social and economic 
benefits, including increased mobility for older adults and people with 
disabilities, reducing traffic congestion, reducing emissions, and 
fostering investment and economic growth.
    The U.S. has an opportunity to advance global leadership in 
developing these revolutionary technologies and new mobility business 
models through a national approach that reduces uncertainty and paves 
the way to long-term success. That is why, in 2020, we released the 
Policy Roadmap to Advance Automated Vehicle Innovation.
    The Roadmap outlines the auto industry's AV policy priorities and 
includes fourteen specific recommendations that can be implemented by 
Federal policymakers over the next four years to facilitate the testing 
and deployment of AVs at scale. These recommendations are focused on 
reforming regulations, harmonizing policies, and laying the foundation 
to achieve longer-term objectives--including expanding the number of 
exemptions that DOT can provide on a case case-by by-case basis--with 
safety oversight and full enforcement powers--which can then provide 
the data necessary to support future Federal Motor Vehicle Safety 
Standards for AVs.
Innovating for a Safer Future:
    If the U.S. is to remain a global leader in automotive safety 
innovation, our policies and programs must keep pace. Uncertainty with 
respect to safety priorities from both a regulatory and consumer 
education perspective can be an impediment to investment in advanced 
safety technologies. The New Car Assessment Program (NCAP) is an 
important tool used by NHTSA to educate consumers on vehicle safety 
through easily understood ratings. NCAP modernization is long overdue. 
Unfortunately, the program has not been updated since 2011 and has 
failed to keep pace with innovations in crash avoidance technologies.
    An effective and consistently maintained NHTSA NCAP, guided by mid-
and long-term roadmaps, will leverage market forces to accelerate the 
development and deployment of advanced safety technologies.
    That is why last year Auto Innovators released the Plan to Advance 
Safety at the Speed of Innovation. This document outlines our vision 
for a 21st Century NCAP, including five recommendations to ensure that 
NCAP achieves its main objectives of providing meaningful information 
for consumers, accelerating the deployment of safety technologies, and 
supporting future regulatory activity.
    In addition to longer-term recommendations, our plan also 
encourages an immediate ``Kick Start'' that would incorporate five 
crash avoidance technologies into the NCAP program. These include:

   Forward Collision Warning/Automatic Emergency Braking (FCW/
        AEB)

   Pedestrian Automatic Emergency Braking (PAEB)

   Lane Departure Warning (LDW)

   Lane Departure Warning with intervention/Lane Keep Assist 
        (LDW/LKA)

   Automatic High Beam Headlamps/High Beam Assist

    These are all proven safety technologies that are already helping 
to avoid costly crashes, while saving lives, on our Nation's roadways 
today. The key to building greater consumer acceptance and adoption of 
these foundational advanced driver assistance systems (ADAS), and 
future safety technologies such as AVs, is consumer education that 
creates awareness about the life-saving potential of these innovations.
    The value of an NCAP that has developed a process for continuously 
evaluating emerging safety technologies and folding them into a Long-
Range Roadmap for vehicle manufacturers cannot be overstated. It 
permits automakers to develop long-term safety strategies that are 
aligned with the identified NCAP safety priorities and expected 
updates. As a result, when updated ratings are implemented, 
manufacturers have had enough time to have products in place that 
provide the enhanced safety performance. This is a ``win-win-win'' 
scenario for government, vehicle manufacturers, and especially 
consumers.
Conclusion:
    The auto industry has long been an economic engine for the Nation 
that millions of workers depend on for their livelihoods. The industry 
is poised to remain the bedrock of U.S. innovation and manufacturing 
for decades to come. Realizing this potential, however, requires 
collaboration, cooperation, and creativity among all stakeholders.
    It is imperative that we work collaboratively to develop a robust, 
national approach to automotive innovation that encourages and 
incentivizes research and development, testing and deployment, 
investment in a resilient supply chain, and bolstering U.S.-based 
manufacturing of advanced technologies, while also mitigating 
unintended consequences of narrow policy objectives. Likewise, a 
failure to embrace and encourage adoption of advanced vehicle 
technologies in the U.S. risks ceding technology leadership and supply 
chain dominance to global competitors. The nations that lead the 
development and adoption of innovative vehicle technologies, such as 
electrification, connectivity, and automation, will also shape supply 
chains, define global standards, and potentially, reinforce U.S. auto 
manufacturing and leadership in the international marketplace. This is 
not just about the future of the auto industry in the U.S.--it is about 
the Nation's global competitiveness and economic security.
    On behalf of Auto Innovators and our member companies, I look 
forward to working with both Congress and the Administration to develop 
and implement policies such as those discussed to realize the promise 
of cleaner, safer smarter transportation future while ensuring the U.S. 
leads automotive innovation for generations to come.

    Senator Peters. Well, thank you. Thank you, Mr. Francis, 
for your opening comments. Our next witness today is Mr. Jay 
Rathert. Mr. Rathert has been with KLA for 26 years. And among 
other roles, he is the Co-Creator and Owner of companywide 
automotive strategy for KLA.
    Before joining KLA, he was a Top Gun trained and decorated 
F-14 fighter pilot, go Navy. Welcome, Mr. Rathert. Thank you 
for your service to our country. You may proceed with your 
comments.

  STATEMENT OF ROBERT J. RATHERT, SR. (JAY), SENIOR DIRECTOR, 
                  STRATEGIC PARTNERSHIPS, KLA

    Mr. Rathert. Thank you, Senator Peters. On behalf of KLA, 
it is an honor to be here to address the hearing with the other 
committee members, and online, and those who were testifying. 
Really all of us carry a technology miracle with us practically 
everywhere we go without giving it another thought.
    More than 7 billion smartphones are in use today, and each 
is loaded with a few dozen of the most advanced chips ever 
designed. Inside those chips are incomprehensibly small 
transistors that allow it to do its many functions, and the 
continuous march of chip technology known as Moore's Law, has 
shrunk these transistors to the point that 150 million of them 
will fit into the period at the end of a sentence.
    The chip that is the brains of your smartphone is about the 
size of a postage stamp, and it has 12 billion of these 
transistors in it by itself. KLA is a quality focused company 
and our role, simply put, is to help chip manufacturers 
everywhere ensure that individual transistors that power chips 
function as designed or manufactured and reliably do so day 
after day. The technology that KLA brings has enabled the 
advance of the entire semiconductor industry for more than 45 
years.
    We are the third largest semiconductor equipment company in 
the U.S., and our equipment is in every chip fab worldwide. 
These same chips are now incorporated into many products, 
including automobiles, enabling innovations like driver 
assistance features, electrification and the autonomy that we 
are addressing today, that appeal to today's drivers. But many 
are surprised to learn that premium cars may contain not just a 
few dozen chips, but the premium cars are now up to as many as 
10,000 individual chips.
    And when I started this just a few years ago, we used to 
say only 3,000, so it has tripled in just a few years at the 
premium level. A growing percentage of these advanced chips are 
central to the operation of the vehicle, serving in either 
mission critical or safety critical roles. When a chip fails in 
your phone after a few years, it is a frustrating 
inconvenience.
    But when a chip fails in a car crash, it can be 
catastrophic, not only bad for business or brand reputation, it 
can put lives at stake. So KLA believes in the growth and the 
importance of chips in automobiles, and it is a secular 
significant shift, and that our quality role will be crucial to 
its success.
    In recognition of this trend, KLA has built a second 
headquarters campus here in Michigan to be close to the 
heartbeat of America's automotive industry and to collaborate 
with the community of local car manufacturers, suppliers, and 
academics that are bringing innovation to this market.
    As part of the Good Jobs for Michigan Program, our move 
here was conceived in partnership with the Michigan Economic 
Development Corporation and approved by the Michigan Strategic 
Fund, and we are proud of our plan to bring 600 new high tech 
jobs here to the region.
    The forces that power the semiconductor industry success 
are access to a talented and creative work force, a fair and 
hospitable business environment, and an ongoing commitment to 
an investment in R&D. And as the transistors shrink further to 
3 nm and below, the technical challenges continue to grow 
harder for everyone across the industry. Innovation and 
collaboration across the supply chain are crucial.
    While the U.S. currently maintains leadership in many 
sectors that support semiconductors, sadly America's share of 
global chip manufacturing has fallen to just 12 percent, down 
from 37 percent in 1990. Nearly three quarters of chips are now 
built in Asia, including all of the most advanced ones found in 
your phone and in your car, as well as an increasing share that 
power the internet, cellular networks, cloud computing, and 
A.I.
    Many of these chips are designed here at home, but all they 
are built overseas by two major contract manufacturers known as 
foundries. Each of these are susceptible to unplanned 
disruption, either from natural disasters or geopolitical 
events, creating a significant strategic liability for America 
and our economy and our jobs here at home.
    In the past, America had multiple domestic chip 
manufacturers vying for technology leadership. Most fell behind 
on the necessary investment to remain technically competitive 
and therefore profitable, and this caused them to change their 
strategies away from the cutting edge, leaving only one viable 
U.S. supplier position to potentially serve this market and 
compete here at home against the entrenched foundry leaders 
overseas.
    The importance in R&D investment to stay relevant and 
competitive in this rapidly evolving business cannot be 
overstated. Furthermore, the capital to build even one 5 nm 
chip can exceed $15 billion. Tax policy and incentives are 
often the key factors in determining where and when these 
factories are built.
    KLA's business is worldwide, but we support efforts to 
increase competition in the chip industry and to re-shore 
advanced manufacturing and foundry production in America. 
Investments like the CHIPS Act enable America to advance our 
competitive differentiation and reinforce the strength of 
domestic semiconductor businesses ecosystem.
    Therefore, we support the $52 billion in public funding of 
the CHIPS Act to supplement the $70 billion in private capital 
the industry already invest in R&D each year and $150 billion 
in CapeX the broader industry will spend. But long term change 
requires a long term view.
    As such, we also support concepts like the FABS Act to 
provide ongoing tax credits for R&D investments that will 
encourage the growth of our domestic manufacturing base and 
create a positive economic ripple across the economy.
    We also support programs that focus on STEM education to 
develop the best and brightest workers here at home, as well as 
those that allow us to attract and retain the best in global 
talent.
    At KLA, our motto is keep looking ahead, reflecting our 
focus on enabling the advance of semiconductor technology, and 
we are grateful to those in the U.S. Congress, like you, 
Senator Peters, and the State of Michigan who share this view 
and who support this strategic industry. Thank you.
    [The prepared statement of Mr. Rathert follows:]

 Prepared Statement of Robert J. Rathert, Sr. (Jay), Senior Director, 
                      Strategic Partnerships, KLA
    On behalf of KLA, it is an honor to be here to address this 
hearing.
    Nearly all of us carry a technological miracle with us practically 
everywhere we go without giving it another thought. More than 7 Billion 
smartphones are in use today. Each is loaded with a few dozen of the 
most advanced chips ever designed. Inside those chips are 
incomprehensibly small transistors that allow it to perform its many 
functions. The continuous march of chip technology, known as Moore's 
Law, has shrunk these transistors to the point that 150M of them will 
fit in the period at the end of a sentence. The chip that is the brains 
of a smartphone (the application processor) is the size of postage 
stamp and contains nearly 12B transistors itself. KLA's role, simply 
put, is to help chip manufacturers ensure that each transistor that 
powers these chips functions as designed when manufactured--and 
reliably does so, day after day. The technology KLA brings has enabled 
the advance of the entire semiconductor industry for more than 45 
years. We're the third largest semiconductor equipment company in the 
U.S. and our equipment is in every chip fab, worldwide.
    Chips are now incorporated into many products, including 
automobiles, enabling innovations like driver assistance features, 
electrification and autonomy that appeal to today's drivers. Many are 
surprised to learn that premium cars may contain, not a few dozen 
chips, but more than 10,000. A growing percentage of these are advanced 
chips that are central to the operation of the vehicle, serving in 
either mission critical or safety critical roles. When a chip fails in 
a phone after a few years, it's a frustrating inconvenience. But when a 
chip fails in a car, it can be catastrophic: not only bad for business 
or brand reputation, it can put lives at stake.
    KLA believes the growth in importance of chips in automobiles is a 
significant secular shift, and that our quality role will be crucial to 
its success. In recognition of this trend, KLA has built a second 
headquarters campus here in Michigan to be close to the heartbeat of 
America's automotive industry and to collaborate with the community of 
local car manufacturers, suppliers and academics that are bringing 
innovation to this market. As part of the Good Jobs for Michigan 
program, our move here was conceived in partnership with the Michigan 
Economic Development Corporation (MEDC) and approved by the Michigan 
Strategic Fund. We're proud of our plan to bring 600+ high-tech jobs to 
the region.
    The forces that power the semiconductor industry`s success are 
access to a talented and creative workforce, a fair and hospitable 
business environment and an ongoing commitment to an investment in R&D. 
As transistors shrink further to 3nm and below, the technical 
challenges continue grow harder for everyone across the industry. 
Innovation and collaboration are critical.
    While the U.S. currently maintains leadership in many sectors that 
support semiconductors, sadly, America's share of global chip 
manufacturing has fallen to just 12 percent, down from 37 percent in 
1990. Nearly three quarters of chips are now built in Asia, including 
all of the most advanced ones found in your phone and car--as well as 
an increasing share that power internet, cellular networks, cloud 
computing and AI. Many of these chips are designed here at home, but 
all are built overseas by two major contract manufacturers, known as 
foundries. Each of these are susceptible to unplanned disruption, 
either from natural disasters or geopolitical events, creating a 
significant strategic liability for America.
    In the past, America had multiple domestic chip manufacturers vying 
for technology leadership. Most fell behind on the necessary investment 
to remain technically competitive and therefore profitable. This caused 
them to change their strategies away from the cutting edge, leaving 
only one US-based supplier positioned to potentially serve this market 
and compete here at home against the entrenched foundry leaders 
overseas. The importance in R&D investment to stay relevant and 
competitive in this rapidly evolving business cannot be overstated. 
Furthermore, the capital required to build even one 5nm chip fab can 
exceed $15B. Tax policy and incentives are often key factors in 
determining where and when these factories are built.
    KLA's business is worldwide, but we support efforts to increase 
competition in the chip industry and to re-shore advanced manufacturing 
and foundry production in America. Investments, like the CHIPs act, 
enable America to advance our competitive differentiation and reinforce 
the strength of the domestic semiconductor business ecosystem. 
Therefore, we support the $52B public funding of the CHIPS act to 
supplement the $150B in private capital the industry is already 
investing this year. But long-term change requires a long-term view. As 
such we also support concepts like the FABs act to provide ongoing tax 
credits for R&D investments that will encourage the growth of our 
domestic manufacturing base and create a positive economic ripple 
across the economy. Similar programs created the astonishing economic 
engine that is the Taiwan Science Park. We also support programs that 
focus on STEM education to develop the best and brightest workers here 
at home, as well as those that allow us to attract and retain the best 
in global talent.
    At KLA, our motto is ``Keep Looking Ahead'' reflecting our focus on 
enabling the advance of semiconductor technology. We're grateful to 
those in the U.S. Congress and in the state of Michigan who share this 
view and who support this strategic industry.
    Thank you.
                                 ______
                                 
                    Supplementary written testimony
Understanding the chip manufacturing landscape:
   Companies that design and manufacture their own chips are 
        known as Integrated Device Manufacturers, or IDMs. Intel is an 
        example of an US-based IDM.

   Foundries are contract manufacturers. They build chips 
        designed by others. They are selling their manufacturing 
        expertise and factory capacity. The leading foundries that can 
        produce the most advanced chips include TSMC, based in Taiwan, 
        and Samsung, based in Korea. GlobalFoundries and several others 
        also serve this market, but can no longer compete for the most 
        advanced designs. While the bulk of foundry production is 
        overseas, Samsung and GlobalFoundries have existing foundry 
        fabs in the U.S. and TSMC has broken ground for a new fab in 
        Arizona. Intel has announced their intent to re-enter the 
        foundry business in the US.

   Fabless companies, such as Qualcomm, Apple or Nvidia, only 
        design chips. They are 100 percent reliant on foundries to 
        manufacture for them.

   Some U.S. IDMs with older factories (such as NXP or Texas 
        Instruments), also use foundries for two different reasons.

    1.  When demand temporarily exceeds their internal capacity, they 
            can send overflow to be manufactured by the foundry without 
            building an expensive, new factory. When demand returns to 
            normal, they can turn off foundry orders without idling an 
            internal factory and laying off workers.

    2.  They also use foundries to produce branded chips whose advanced 
            designs exceed their in-house capability to manufacture. 
            They are 100 percent reliant on foundries to build these 
            chips.

   Foundries now produce a large percentage of chips worldwide 
        and all of the most advanced designs. If overseas foundry 
        manufacturing capacity were disrupted due to natural disasters 
        or geopolitical events, the economic and strategic impact to 
        the U.S. economy and all of its many chip-reliant sectors would 
        be devastating, dwarfing the current shortages.
Understanding the chip reliability problem
   Semiconductors require very precise manufacturing. The 
        transistors and the connecting circuitry in today's advanced 
        chips measure just a few tens of nanometers (millionths of a 
        millimeter) in size. Minute manufacturing deviations of even a 
        few nanometers can prevent the chip from functioning properly 
        and must be carefully controlled. These processing flaws are 
        known as defects.

   Semiconductor chips have a long manufacturing cycle, lasting 
        3 months or more. The most advanced chips may require 800 or 
        more individual processing steps. Specialized processing 
        equipment from leading U.S. companies like Applied Materials 
        and Lam Research as well as ASML (Netherlands) and others 
        perform these many steps. Nanoscale manufacturing defects in 
        the chip are possible at any step due to misprocessing, 
        unpredicted tool failures or a variety of random or systematic 
        causes.

   Complex, automated inspection systems from KLA and others 
        monitor each key process step to ensure the quality of the 
        chips, finding defects and alerting manufacturers to the source 
        of any problem.

   Completed chips are electrically tested on automated test 
        equipment before entering the supply chain so that non-
        functioning or poorly functioning chips can be identified and 
        removed.

   Some chips may contain small, partial defects that don't yet 
        impact the chip. These can't be detected by the tester, and 
        therefore ``escape'' into the supply chain. Known as latent 
        defects, they fail only after being in the operating 
        environment.

   These types of defects are a great concern to the automotive 
        industry, especially for autonomous driving and other safety-
        related applications. Latent defects impact vehicle reliability 
        and brand reputation. Failures can create a liability issue and 
        put customers at risk. The dramatic increase in chip content 
        per car increases the likelihood of these premature failures. 
        The pressure to put the newest chip technologies into cars 
        further exacerbates the issue.

   Collaboration across the supply chain: including vehicle 
        manufacturers, Tier 1 suppliers of electronics, chip 
        manufacturers, process tool and tester suppliers and quality-
        focused companies like KLA are the best opportunity to identify 
        and remove chips that may contain latent defects and bring 
        undesirable risk to this important emerging capability.
Chips in conventional cars and EVs
   Today's vehicles contain virtually every type of device and 
        design technology to power the driver assistance features, 
        connectivity, navigation, electrification and autonomy 
        capabilities.

   Cars contains dozens of chip-based sensors like CMOS 
        imagers, short and long range radars and ultrasonic ranging 
        systems. Each of these chips feeds data to high power computing 
        systems to make sense of the car's environment and compare it 
        in real time to software models to help it decide on safe 
        actions. These computer chips will be in contact with other 
        chips that actuate lighting, signaling, braking and other 
        safety features. Other chips power the dash and infotainment in 
        the cockpit. Still other chips keep your car in communication 
        with GPS, Bluetooth and emerging connectivity with traffic 
        infrastructure and other vehicles, while others monitor the 
        safe operation of the engine. Chips are critical to 
        performance, innovation and safety in the car.

   While chip content is rapidly growing in all vehicles, it is 
        significantly higher in EV vehicles.

   While most chips are built on silicon wafers, specialized 
        chips made to handle the high power associated with EV electric 
        motors and charging are creating new opportunities for emerging 
        materials like silicon carbide or gallium nitride that can 
        handle the higher voltages in a smaller chip, along with many 
        other advantageous attributes.

   These new semiconductor types are less mature than silicon-
        based devices, causing more defects and an increased focus on 
        the type of quality improvement that KLA makes possible.
US competitive interests
   America is rightly concerned about U.S. technology and/or IP 
        being used against our national interests for defense or 
        intelligence use-cases, among others.

   Manufacturing the most advanced chips requires a few very 
        specific technologies from U.S. and allied sources. Limiting 
        these few critical systems alone is sufficient to hobble any 
        advanced chip development.

   The ``Big 3'' U.S. chip equipment providers (Applied 
        Materials, Lam and KLA) have emerging competitors for the more 
        mature manufacturing technologies made in overseas (China) chip 
        fabs that serve consumer markets. These simpler technologies 
        aren't practically applicable to the national defense 
        interests. Blanket prohibitions, export licensing, etc. on all 
        systems and parts hinder the ability of American companies to 
        serve these non-strategic markets and have the unintended 
        consequence of making overseas competitors stronger. U.S. 
        semiconductor manufacturers can collaboratively work with the 
        U.S. government to better meet the desired policy goals while 
        simultaneously sustaining American competitive business 
        advantages

   In healthy, competitive semiconductor markets, prices for 
        chips at newly released process technologies start very high 
        when demand for them is hot and supply is still somewhat 
        constrained. As the technology (a.k.a. node or design rule) 
        matures, prices fall toward their marginal cost as capacity 
        comes on line, competitors emerge and process economies of 
        scale take hold. Fab personnel and resources then begin to be 
        reallocated to the next technology shrink, powering Moore's 
        Law, as suppliers race to bring the next new, more powerful and 
        economical chips to market and catch the next wave of higher 
        prices. Laggards who fail to bring their technology to market 
        on time, miss the period of high profits, hurting their 
        profitability and ability to invest in new fab capacity and 
        technology. Historically, this initiates a downward spiral of 
        that is difficult to recover from. Remaining competitive 
        requires successful technology development based on both 
        sufficient investment and effective execution.
Chip shortage
   The ongoing chip shortage is the confluence of several short 
        term and long term causes. Long-term, chip demand continues to 
        climb against a historically conservatively growing supply 
        base. Short term, unplanned fab interruptions and misallocation 
        due to COVID and changing inventory models has led to 
        increasing lead times and downstream interruptions for chip 
        customers.

   Existing fabs and foundries are wringing out all 
        inefficiencies and running at very high manufacturing capacity. 
        New capacity comes online very slowly--measured in years--as 
        new fab decisions are made, planned, built, qualified and 
        products ramped to volume. Equipment lead times exceed 1 year 
        alone. Capacity adds started today won't be felt for a 
        significant period of time.

   KLA's role in improving quality and yield (percentage of 
        working chips vs chips produced) helps chip fabs maximize their 
        productivity, assuring that highest possible percentage of 
        chips that start the manufacturing line are available to serve 
        customers when they finish three months later.

    Senator Peters. Thank you, Mr. Rathert. Our last witness 
today is Mr. Glenn Stevens, Executive Director of MICHauto and 
Vice President of Automotive and Mobility Initiatives at the 
Detroit Regional Chamber. Mr. Steven's hall leads MICHauto, the 
voice and convening body for Michigan to address key industry 
issues for talent, advocacy, and awareness.
    Mr. Stevens has more than 25 years of experience across the 
automotive steel--equipment industries. He is a proud 
Michigander, a graduate of Michigan State University--go green. 
And welcome, Mr. Stevens. You may proceed with your opening 
remarks.

    STATEMENT OF GLENN STEVENS, EXECUTIVE DIRECTOR, MICHauto

    Mr. Stevens. Thank you. Well, I have never followed a Top 
Gun before, so I will do my best. Thank you for your service. 
Welcome to the Detroit Regional Chamber. It is a pleasure and 
honor to have you, Senator Peters, members of the Subcommittee, 
and fellow industry peers.
    We are lucky enough to have Ford, Stellantis, Denso, Foley, 
Dunamis Energy, the MEDC, and Automation Alley. I hope I didn't 
forget you but thank you for being part of our community here. 
As you know, we have submitted written testimony, but I would 
also like to add that, to pick up on Mr. Dawes comment, this 
weekend, driving around Metro Detroit, two things stood out to 
me.
    One is the number of parked vehicles that are sitting 
waiting for chips or completion of semiconductor components, 
and they are everywhere, new vehicles, vehicles that are 
important to these customers. And the second thing, as many of 
you know, when you pass an auto dealership, it looks quite 
different than we are used to it.
    There are virtually no vehicles on those lots, and it is 
very difficult to buy a new vehicle. With those things in mind, 
please allow me to express the following frame of things. The 
United States, and particularly Michigan, remains at the 
forefront of auto mobility, innovation, and production. The 
Great Lakes region is number one in automotive manufacturing 
jobs. The Great Lakes states' investment in R&D outpaces the 
rest of the nation, and Michigan represents 18 percent of all 
U.S. vehicle production.
    However, as both the COVID pandemic, the weeklong closure 
of the Ambassador Bridge in early February, Russia's recent 
invasion of Ukraine, another earthquake unfortunately in Japan, 
there are clear episodes of instability that transcend national 
borders and also have painful impacts on the global supply 
chain in Michigan's signature industry.
    As this committee knows, the current shortage of 
semiconductors has hampered the auto industry's ability to 
build and sell vehicles. The vehicle industry now considers 
them unrecoverable, and in Michigan alone, we are approaching 
300,000 vehicles last year, 2.3 million in the United States, 
compared to 1 million in China. There is no silver bullet to 
this issue.
    In fact, I am sure Mr. Ford would have something to say 
about the supply chain efficiency and resiliency if he were 
here with us today. But currently, a disproportionate number of 
these chips are manufactured away from our shores, in other 
countries, and stall U.S. production, and it illustrates the 
problematic nature of relying on these foreign suppliers.
    Therefore, our elected labor and industry leaders must 
prioritize building a more resilient domestic supply chain. 
Intel's announcement in Ohio is a perfect great step. Arizona's 
announcements with regards to it, hopefully in Michigan, we 
will have plants like that here in the future.
    We urge the lawmakers and the community to further extend 
and commit the approval of the CHIPS Act, but also the FABS 
Act, the Investing in Domestic Semiconductor Manufacturing Act, 
and the Securing Semiconductor Supply Chain Act. All of these 
are complementary and bipartisan pieces of legislation that 
demonstrate from what my colleagues from industry and labor 
have shown, that building this technology in the United States 
isn't just good for business and the American worker, it is 
sound public policy.
    Investing more in domestic chips means expanding not just 
the number of manufacturing jobs, but also high tech jobs. 
These facilities are often called labs to fab, and their 
amount--there are a tremendous amount of high tech workers, 
skilled trade workers, and production workers available in 
these facilities for our American workers.
    We see this as both something that represents good, high 
paying jobs, but will also require sophisticated talent 
strategy here in Michigan and the rest of the country to 
support that. This is something that we in MICHauto and the 
Detroit Regional Chamber are very committed to.
    Speaking of AVs, we also would like to ensure that the 
Senate also would revive the AV START Act, first introduced by 
yourself, Senator Peters, and Thune. We believe this 
legislation is highly needed, and we hope that we will 
anticipate that again in the future and look forward to 
supporting it.
    Finally, in order to ensure that the leaders in this 
technology and other mobility innovation remain here, we also 
need high skilled and high tech talent workers from other 
places, around the country but other countries. So we would 
also encourage lawmakers to sharpen this competitive edge by 
taking up the bipartisan immigration legislation currently in 
the House of Representatives.
    The Fairness for High Skilled Immigrants Act would remove 
arbitrary per country caps on the number of high skilled 
foreign workers that could come to the United States. In 
closing, Michigan, the birthplace of the automotive industry, 
remains globally competitive as a leader in the automobile 
sector.
    The industry employs over 1.1 million people, directly and 
indirectly in our state, and contributes over $300 billion of 
the economy to our State every year. Continues to draw 
significant foreign and domestic investment. We welcome KLA to 
our community, and they have been a great citizen and we would 
like to see more of that type of company here in Michigan.
    We hope that here in our state, our Administration and 
policymakers will prioritize the domestic sourcing of these 
production and also the high skilled talent factor in research, 
design, engineering centers across our state and country. 
Policymakers would therefore be wise not to let the past 
success of the American auto industry lull us into a false 
sense that we will continue this and enjoy its success in the 
future.
    We need our leaders, from Capitol Hill to the C-suite to 
the Union Hall, to come together, champion, and enact the type 
of future oriented legislation I talked about today--we all 
have talked about today.
    These bipartisan pieces of legislation are our chance to 
secure America and Michigan's position as a dominant leader in 
automotive and mobility manufacturing and innovation for the 
future. We shouldn't pass this opportunity up. Thank you, 
Senator Peters and to my peers. Really appreciate the 
opportunity today.
    [The prepared statement of Mr. Stevens follows:]

   Prepared Statement of Glenn Stevens, Executive Director, MICHauto
    The United States and particularly Michigan remains at the 
forefront of automobility innovation and production worldwide. The 
Great Lakes State leads the Nation in the number of automotive 
manufacturing jobs, investment in automotive R&D far outpaces the rest 
of the nation, and Michigan auto manufacturing output represents 
eighteen percent of all U.S. vehicle production. However, as both the 
COVID-19 pandemic, the weeklong closure of the Ambassador Bridge in 
early February, and Russia's recent invasion of Ukraine has made clear, 
episodes of instability that transcend national borders also have 
painful impacts on the global supply chain and Michigan's signature 
industry. As this committee knows, the current shortage of 
semiconductors has hampered the auto industry's ability to build and 
sell vehicles here in America and around the world. In fact, according 
to AutoFocus Solutions, Michigan Automakers produced 280,000 fewer 
vehicles, known as ``unrecoverable vehicles,'' in 2021 due to the 
semiconductor shortage. Furthermore, North America in general produced 
2.3 million unrecoverable vehicles compared to China at one million.
    There is no shortcut or silver bullet to solve this issue, chips 
are among the most important components in the assembly of vehicles and 
will only become more important as autonomous and electric vehicles 
become more ubiquitous throughout the market. Currently, a 
disproportionate amount of chip manufacturing is done far from our 
shores, in countries like Taiwan and South Korea and the shortage of 
chips now stalling U.S. auto production, illustrates the problematic 
nature of relying on these foreign suppliers. Therefore, our elected, 
labor, and industry leaders must prioritize building a more resilient 
domestic supply chain.
    Intel's announcement earlier this year that it would invest $20 
billion in the construction of two chip factories in Ohio is a 
promising signal that policymakers and the private sector are 
recognizing the importance of this issue. Lawmakers in Washington can 
turbo charge these efforts by passing the CHIPS Act which would invest 
$52 billion to expand domestic research, design, and production of 
chips. There are several other important pieces of legislation I would 
like to highlight as well. The FABS Act creates a tax credit for 
semiconductor manufacturing and design that will further incentivize 
domestic production. The Investing in Domestic Semiconductor 
Manufacturing Act will ensure that the CHIPS Act, once enacted, will 
include U.S. suppliers that produce the materials and manufacturing 
equipment that enable semiconductor manufacturing. This will further 
incentivize the production of materials and equipment in the United 
States while also reducing the risk of foreign supply chain 
bottlenecks. The Securing Semiconductors Supply Chain Act will direct 
the Commerce Department's SelectUSA program to solicit feedback from 
states about how they are working to attract foreign direct investment 
related to semiconductor supply chains, and then to develop a strategy 
to build on states' efforts and augment them with Federal support. All 
these complimentary and bipartisan pieces of legislation demonstrate 
what my colleagues from industry and labor also know, that building 
this technology in the United States isn't just good for business and 
the American worker, it's sound public policy.
    Investing more in domestic production of chips means expanding not 
just the number of manufacturing jobs but also high-tech jobs 
associated with the automotive industry and strengthening our ability 
to keep such jobs in the United States. This is both an opportunity and 
a challenge as these represent thousands of good, high paying jobs but 
will require a sophisticated talent strategy that requires both the 
public and private sectors to implement. Congress could take a huge 
step toward implementing such a strategy by agreeing upon a finalized 
competitiveness package, that reconciles the House's Creating 
Opportunities for Manufacturing, Pre-Eminence in Technology and 
Economic Strength (COMPETES) Act and the Senate's U.S. Innovation and 
Competition Act (USICA). In addition to including much of the 
legislation I previously mentioned that will directly support U.S. 
manufacturing, both the House and Senate legislation include 
significant new funding for our Nation's science agencies and R&D that 
will drive innovation in all kinds of important areas, from AI and 
machine learning to Critical Minerals Mining Research. This legislation 
would also establish a regional technology hub program that could 
greatly benefit a region like ours as it grapples with the automobility 
industry's rapid transition around both EVs and AVs.
    Speaking of AVs, to ensure that we're not just building the 
vehicles of today but also innovating for those of tomorrow, 
policymakers should act now. To this end, we encourage the adoption of 
Federal legislation that will create a safer and robust autonomous 
vehicle testing and research environment. Therefore, the Senate should 
revive the AV START Act. First introduced to the Senate in 2017 by 
Senators Peters and Thune, this legislation would create a Highly 
Automated Systems Safety Center of Excellence to review, assess and 
validate the safety of self-driving vehicles; expand testing exemptions 
to ensure vehicle manufacturers and manufacturers of automated driving 
systems are eligible; and give the National Highway Traffic Safety 
Administration the authority to expand exemptions for automated 
vehicles. This is the type of proactive policymaking that can future 
proof the Nation for what may otherwise be a tumultuous period for both 
the industry and drivers as more and more autonomous driving technology 
is adopted.
    Finally, in order to ensure that we are the leaders in this 
technology and other mobility innovation, we need more high-skilled and 
high-tech workers to come to the United States. Lawmakers from both 
parties are aware, in the global economic competition with China and 
other economic powers, there is perhaps nothing more important than the 
battle over talent attraction and retention. Despite the much-heralded 
rise of China over the last several decades, there is still no better 
place to innovate and do business than the United States. Our 
universities and research institution are the best in the world. Our 
business climate and rule of law ensure that new businesses can grow 
faster and without the fear of public or private interference or 
corruption that they might encounter elsewhere. Lawmakers can sharpen 
this competitive edge by taking up the bipartisan immigration 
legislation currently in the House of Representatives. The Fairness for 
High-Skilled Immigrants Act would remove arbitrary per-country caps on 
the number of high-skilled foreign workers that can come to the United 
States each year. The current system caps the percentage of green cards 
that any one country can receive at seven percent, a threshold that is 
quickly met by large populous countries with many high skilled workers 
eager to come to our country. Removing these caps will ensure that a 
first-come-first-serve and merit-based system can be implemented that 
will positively benefit America's need for high skilled talent in 
places like Southeast Michigan and around the country.
    In closing, Michigan, the birthplace of the automobile, remains 
globally competitive as a leader in the automobility sector. The 
industry employs over 1.1 million people in the State, contributes $304 
billion every year to the State economy, and continues to draw 
significant foreign talent and investment to Michigan. However, this 
status will be challenged as the industry continues to undergo historic 
transformations in the coming years. Policymakers would therefore be 
wise not to let the past success of the American auto industry lull us 
into a false sense that we will continue to enjoy such success in the 
future. We need all our leaders, from Capitol Hill to the C-Suite to 
the Union Hall, to come together, champion, and enact the type of 
future oriented legislation I have talked about today. These bipartisan 
pieces of legislation are our chance to secure America and Michigan's 
position as a dominant leader in automobility manufacturing and 
innovation. We shouldn't pass it up.

    Senator Peters. Well, thank you, Mr. Stevens and each of 
our witnesses. Thank you for your opening remarks. Mr. Dawes, 
certainly, the public has seen an awful lot of media attention 
to the chip shortage and the impact that it has had on the auto 
industry, but your folks have experienced it firsthand as a 
result of layoffs and changes to try to adapt to the shortages.
    That is why Senator Stabenow and I secured $2 billion in 
the Senate-passed Competitiveness Bill to manufacture the so-
called mature legacy chips here in Michigan that are used by 
automobiles. This is in addition to the $50 billion that is in 
the package to include research and development, as well as 
manufacturing for advanced semiconductors.
    But my question for you, sir, is can you describe the human 
impact of the chip shortage and tell the Committee how it 
affected not only autoworkers, but also communities in Michigan 
and across the country?
    Mr. Dawes. Well, it is a devastating effect because, you 
know, as we have all lived through this pandemic, you know, we 
are social people. We like to be out in public, we like to go 
to ballgames, and we like to go to work. We like to go to work 
and probably build the vehicles that we build in this State, in 
this country to the point where they are the best built and 
reliable vehicles in the globe.
    And when that gets restricted and you are told, hey, we are 
shutting your facility down for weeks and weeks and weeks only 
due to a lack of parts, that is very devastating for a person 
that wants to come to work and make a living and provide for 
his family and pay their fair share of taxes.
    So it has had a huge effect. And especially when you can 
relate it to something that is in our grasp, something that we 
could be doing, something that we could be building right here 
in the United States, and more importantly, in my opinion, 
Michigan. Two of the main components that you need to build 
semiconductor chips are electricity and water.
    Now, ironically, as I sit here and say that looking out 
over this--one of them we have plenty of. Nobody else has what 
we have. And so there is no better argument and no better place 
to build than right here in Michigan.
    Senator Peters. Yes, absolutely. You talked about, in our 
grasp and acting, and I think all of the witnesses have 
mentioned legislation before Congress to address this issue. So 
my question to you again, Mr. Dawes, is if we don't pass this 
legislation, what signal is that sending to autoworkers and 
working people across the country if we don't pass this 
legislation?
    Mr. Dawes. Well, I think the signal is that, you know, as 
Americans, as working men and women of this great country, is 
we go to work every day and we do our fair share, and we expect 
a fair day's pay. And we are willing, we are able. We have time 
tested talent as history has shown, so we can do it. We are 
willing to do it. We stand ready.
    And the roadblock, if it is our legislative process that 
puts a roadblock into the men and women that want to come to 
work and make it a fair days' wage so they can go and pay their 
fair share of taxes to keep this country going, that is 
absolutely devastating, that something like that could hinder 
and put a roadblock in.
    Senator Peters. Yes. Thank you. Thank you. Mr. Rathert, in 
November, Michigan was proud to welcome KLA to Ann Arbor, where 
the company opened its second headquarters, especially 
considering how clear it has become that the semiconductor 
industry is absolutely essential to our auto industry, and 
really the entire modern economy for that point.
    In Michigan, we make things, and while we are known for 
making cars, our engineers and our workers have the skills and 
talent to develop a wide range of cutting edge technology like 
KLA's semiconductor manufacturing tools. Of course, Michigan 
has so much to offer that it makes it, I think, a top 
destination for innovators like KLA, and you have demonstrated 
that with your selection to locate here.
    But my question for you is, sir, is can you discuss KLA's 
selection process that culminated with choosing Ann Arbor for 
your second headquarters? And can you pinpoint some of the 
reasons why Michigan is where KLA wants to be?
    Mr. Rathert. Yes, sir. Yes, Senator. So KLA started out as 
a Silicon Valley company, but we are now a Michigan company. 
Our new headquarters opened here in Ann Arbor, as the Senator 
mentioned it, last fall, and we already have 400 new hires at 
that site. And I checked our website before the meeting today, 
and we have 200 recs opened now.
    So if you love hi tech, come be one of us. We have invested 
$195 million so far, and our new campus is adjacent to the 
University of Michigan. We looked at hundreds of sites before 
we picked Michigan, but we were drawn by engineering--by the 
strong engineering talent here.
    And I heard your comments before, Michigan builds things. 
Absolutely. That is why we are here. Our partnership with the 
University of Michigan Engineering School helped be a feeder 
for the kind of talent we need to build these complex systems. 
We like your international access with your airport here. Easy 
to get to Asia and Europe where our customers are.
    We had a great partnership with the Michigan Economic 
Development Corporation. And most importantly, as we went 
searching, Michiganders had a can do and how can we help 
attitude. And we didn't encounter that everywhere. So you made 
us feel welcome. Happy to be here.
    We continue to want to grow here. And furthermore, in my 
experience, where chip companies land, things tend to cluster 
up. I think about Austin and Chandler, Arizona, Portland, San 
Jose. So I think when the secret gets out, there will be more 
like minded high tech companies who will join us here.
    Senator Peters. First of all, thank you for that answer. I 
am going to ask a few of you some questions here related to 
autonomous vehicles which represent the future for the auto 
industry. And certainly while the exact timing and the details 
are going to be influenced by both, technological factors as 
well as economic factors, one way or another, cars will 
ultimately be autonomous.
    And there are already autonomous vehicles on our roads in 
various parts of our country. And I think that, quite frankly, 
is really good news, especially in light of the tremendous 
safety benefits that these automobiles are going to deliver. 
And I cited some figures in my opening comment that really 
scream out for change when you are talking about the lives of 
tens of thousands of Americans who die on our highways every 
year.
    So Mr. Rathert, getting back to you, could you share some 
more details with this subcommittee on how semiconductor chips 
will play a role in making autonomous vehicles a reality?
    Mr. Rathert. Yes, Senator. So many of the chips that are in 
your vehicles today have been in the supply chain for a long 
time, and the quality has been well tested, well-proven. 
Qualified chips might be in the supply chain as long as 15 
years. So there is lots of opportunity to assure that chips in 
critical roles will be reliable.
    I think the concern as we push into these advanced 
capabilities like autonomous driving, we are going to bring 
some technology and some very advanced chips, maybe from the 
consumer space that haven't had that long time to mature. And 
we are going to ask and perform functions that will be mission 
critical and safety critical. We are going to put our families 
in those cars.
    We are going to want those chips to perform reliably. Now 
this is KLA's core mission, and that is why we are so 
interested in working closely with the automotive sector, but 
the OEMs, with the Tier 1s, help them to understand the nuances 
of chip quality, how to make sure that all those new devices, 
which there may be thousands interacting with each other, and 
we can do so flawlessly, we want to make sure that that goes 
well. Protects the lives that it is intended to.
    Senator Peters. Alright. Thank you. Mr. Francis, my 
question for you also follows along with autonomous vehicles 
here. In my mind, we are going to have autonomous vehicles, as 
we mentioned. The only question is, will the United States and 
its allies actually lead the way in developing this technology, 
or are we going to cede this advantage to other nations like 
China?
    So my question to you, sir, is can you comment on the 
importance of maintaining our competitive advantage when it 
comes to autonomous vehicles, as well as related essential 
technologies like artificial intelligence?
    Mr. Francis. Certainly. Thank you for that question, 
Senator. You know, the American auto companies and auto 
companies that produce here have invested billions of dollars 
in research and development in autonomous vehicles. One of the 
things that Mr. Rathert mentioned is, is that, you know, these 
are going to take time to mature. But good public policy will 
also make sure that we do it safely and we do it smartly.
    We need our companies to have the opportunity to test and 
deploy so that these things can be tested in real conditions. 
And so, you know, as we look to the future, our 
competitiveness, foreign nations are already invested in this 
technology. And so we in the United States need to make sure 
that our public policy is keeping pace with that global 
investment.
    At the auto innovators, we have developed an AV roadmap 
that lays out a clear 4 year plan for policymakers to preserve 
and enhance U.S. leadership in autonomous vehicles and 
autonomous technology development for life saving technologies. 
We need to look at it that way. Autonomous vehicles offer a 
great opportunity for people around the country, whether it is 
in rural areas or disadvantaged areas, that have mobility 
challenges.
    And as I mentioned before, in the auto industry, a number 
of things that are going to happen in the auto industry and 
that happen here in Michigan find their way into other things, 
defense industry benefits, education industry benefits, medical 
industry benefits.
    So our supply chains that are so vital and so important to 
Michigan and to autonomous vehicles are connected across the 
spectrum of U.S. manufacturing. So your leadership in talking 
about how to move that conversation forward in terms of AV, and 
your bipartisan work to try and find a way to encourage public 
policies that do just that, will continue to be very critical.
    Senator Peters. Alright. Thank you. So, Mr. Dawes, when we 
are talking about these changes, my question for you, sir, is 
what are you seeing in terms of deployment of these 
technologies play out actually in the factories, on the shop 
floor? And specifically, how has making cars changed over the 
years as you have watched it with respect to chips? And where 
do you see things heading when it comes to workers?
    Mr. Dawes. Well, as I said earlier, the difference in the 
modern vehicle--what the vehicle was when I grew up is totally 
different. You open the hood of a vehicle today versus just a 
few years ago, you look in there and you would see the steering 
shaft come out, going down to the steering box, and all that 
is, is a clump of wires coming out that does--that performs all 
of that.
    So that is a big part of how manufacturing has changed 
today. And quite frankly, those of us, me included years ago 
that were reluctant to that change maybe or afraid of that 
change, now enjoy that change. I love my heated steering 
wheel--I love my heated seats in Michigan, and everyone in here 
has got something either on their hip or their pocket or laying 
on the table.
    As Mr. Rathert said, is that who to believe years ago what 
their cell phone would do. I remember I had a bag phone and 
look at what one does today. So there is a huge shift in how we 
manufacture and what the functions of the vehicles and how they 
are performed, more so than the functions. So, that is a big 
change.
    What we see, one of the other major changes is when you 
remove the internal combustion engine along with the 
transmission as we know it today and then drive shaft into the 
rear axle that is a significant change that will be taken over 
with electrical components. But approximately today, 80 percent 
of the vehicle remains unchanged. You still have all your 
interior, your steering wheels, your brake pedals, your seat, 
your heating, your air conditioning outside, you still got your 
sheet metal, you still got your tires, and what have you, and 
then the frame structure.
    You know, all of that, whether it is, you know, propelled 
with an internal combustion engine or electric motor, you still 
have all the safety features, crash specifications, and what 
have you. All of them safety features that still need to 
maintain. So about 80 percent of the vehicle remains unchanged.
    So those are some of the things that, you know, are 
naturally on our radar. And I got to tell you, I am a GM guy. I 
don't have any Ford or Stellantis in my region. I have all 
General Motors.
    But I can tell you with working with our General Motors 
counterparts in the design and the engineering and at the 
management level, along with our membership and our leadership 
in our factories, we launch vehicles like have never been 
launched with the quality and time-frame that have never been 
done in the history of this country.
    And I give that accolades to the management and the union 
and working together, and we look forward to these future 
changes. They are part of our lives. We do them every day. And 
as I said earlier, we stand willing and ready.
    Senator Peters. Right. I am going to want to return in a 
moment to electrification, labor issues, and the talent 
development, et cetera. But before I do that, I want to return 
to the current chip shortage for a moment. And my question is 
going to be for you, Mr. Stevens. You know, when it comes to 
chip shortage, as I mentioned, the public is aware of the 
impact that it has on the auto production, but they aren't 
necessarily aware of the very long supply chain that gets to 
that auto production. It is very complex. Numerous players.
    So when auto production is disrupted, it doesn't just 
affect the major automakers, which people are familiar with. It 
involves numerous suppliers' businesses, many of which are 
small businesses that are involved in every step of auto 
production and countless workers all along that chain. And that 
is why I believe it is so important that we fund the CHIPS Act 
and the $2 billion investment in legacy chips, as I have 
already mentioned.
    Not only will manufacturing chips in America create 
numerous good paying jobs in the semiconductor industry, but it 
is going to protect and grow jobs all through the manufacturing 
sector. And so my question for you, sir, is can you describe 
the ripple effects that the chip shortage has caused throughout 
the auto supply chain?
    And if you could comment on what funding the CHIPS Act will 
mean to workers and businesses all up and down that chain and 
why we need to take action on it.
    Mr. Stevens. Certainly. We will focus on Michigan, which we 
do well. So the auto industry is in virtually every community 
in Michigan, virtually every single community, and we will see 
it very clearly in an assembly plant, but you don't see it so 
much as you go down into the lower tier companies.
    And those lower tier companies, which might employ 10 
people, 60 people, all the way up to 6,000 people, they are 
what contributes to local communities, local economies, and 
there is an indirect multiplier effect in each one of those 
communities. So when there is disruption, for example, the 2-
weeks down of a General Motors plant, you can imagine what that 
does to the local community on a daily basis.
    And when that stacks up, like it has stacked up over the 
last couple of years with the supply of the microchips and the 
problems, it has had an exponential factor on our communities. 
So the localization and the investment in our own country of 
stabilizing and making that supply chain more resilient so 
those peaks and valleys of production are not seen, these 
plants require stability, but so do the communities to operate.
    So we are hopeful as we see these investments in the United 
States, it will--we will start to see even more growth in those 
economies and certainly not the dramatic impact that these 
economies feel in these local communities, as well as the large 
cities.
    Senator Peters. Alright. Thank you. The--Mr. Rathert, 
question for you, and this turns us back to the electrification 
of the fleet, which we have been talking about and how 
innovative semiconductor technologies are going to help reduce 
charging times as well as increase battery range, which is 
critical for this transition to occur.
    Not only will it benefit the environment by reducing 
emissions, which is a huge benefit, but it will also end our 
need to rely on gas to power our vehicles and remove a really a 
major transportation cost, as well as we see potential National 
Security issues for around the world. So my question to you, 
sir, is can you talk about how semiconductors are going to help 
enhance EVs and make a fully electric future truly possible?
    Mr. Rathert. Yes, Senator. So EVs are different from your 
standard combustion engine automobile, and the fact that chip 
content is nearly three times what you would find in your 
standard automobile. And a lot of those chips are coming from a 
technology that has been used--it is called silicon carbide.
    It has actually been used in a lot of cases before, but now 
we are bringing it into our automobiles and it is handling this 
battery management, fast charging, lots of the capabilities 
that make EVs possible, and we have really never stress tested 
it the way silicon has been tested for the last 70 years. So 
there is a lot of maturing going on in that part of the economy 
right now.
    I was in North Carolina this last week working with a 
company to try and improve the kind of necessary quality they 
are going to need to deliver silicon carbide. So I think there 
is a lot of people interested in that. It will power your 
vehicles into the future and bring the sorts of capabilities 
that we are all interested in, this additional safety, this 
reduction of greenhouse gas, and so the productivity gains we 
hope to get so.
    Senator Peters. Very good. Thank you. Mr. Francis, could 
you expand a little bit on how you believe, and your 
organization believes electrification is going to literally 
transform mobility in the future?
    Mr. Francis. Certainly, Senator. I mean, as we look at it, 
our members, our automakers, and our suppliers are investing 
hundreds of billions of dollars investment in moving toward 
electrification.
    And they have done that because it is what the consumer 
wants. It is what the consumer sees as the future. And so as we 
look to it, we see a couple of things, both supply side and 
demand side. And working with the Government--there are a 
number of necessary conditions for the success of this 
transformation. The technology is there, and we are continuing 
to build on that technology.
    Our members are--have announced more than almost 150 new 
models of EVs in the next several years to be available to 
consumers at all price points. And so the market is rich, the 
market is developing. But I think one of the things we are 
looking at, as Mr. Rathert said, is that as these technologies 
mature, we are focused on safety, we are focused on consumer 
adoption, we are focused on a number of advancements.
    And so the supply chain overall is extremely critical, and 
semiconductors are a major part of that. But it is also, as I 
mentioned, there are a number of other things in the U.S. 
supply chain in terms of a robust, resilient supply chain we 
need to be looking at. We need to be looking at critical 
minerals.
    We need to be looking at those production capabilities and 
how we can do it in the U.S. in a smart and environmentally 
sensitive way. So there are a number of components to it, but 
our members, as I mentioned, are all in. They are dedicated to 
this cleaner, safer, smarter transportation future and electric 
vehicles including, you know, battery electric.
    And a number of things all fit into that. And so it is a 
risk robust growing market for our folks. And I think again, it 
is what consumers are telling us they want.
    Senator Peters. Yes. Very good. Mr. Stevens, we, those of 
us in Michigan, have seen many transformations through the auto 
industry through many, many years, starting back before our 
time with Henry Ford with the, let me be clear, before our 
time, that brought the assembly line. And the auto industry has 
been always very highly adaptive, as well as our auto workers 
who have been an integral part of all of that.
    And so now we are discussing some other transformative 
changes from electrification to automation. So if you could 
talk a little bit about what trends in the auto industry we are 
talking about in the future, what that actually means for 
Michigan, and more importantly, how can the State of Michigan 
actually harness them to create absolute new generation of 
opportunity here in our state?
    Mr. Stevens. Yes, that is a great question. And to pick up 
on Mr. Dawes earlier when he said that 80 percent of the 
vehicle remains the same. It does, but the nature of those 
components dramatically changes. So you have the vehicle 
becoming a telecommunications provider, ultimately. So there is 
a technology stack with the vehicle that is occurring. And when 
you look at the other significant changes, we know it is the 
propulsion system.
    But it is not just the propulsion system that is changing 
because we have traditionally focused on the industry, when you 
look at design, engineering, and manufacturing. Now, there is 
two things in front of it and before it, that is the grid and 
the infrastructure that supports electrification and 
recyclability.
    Recyclability has always been important to the industry, 
but now it becomes critical, particularly because of the 
critical minerals. We need to bring them back to the front of 
the process. So the economic opportunity when you look at all 
four of these major areas with regards to telecommunications 
and software and electrification, it is a tremendous 
opportunity for Michigan.
    We are working very closely with the Governor's 
Administration and the Legislature right now. I can very 
honestly and safely say that we were pleased with the progress 
that is being made. There is an incredible focus right now on 
all four of those areas, and specifically the focus is on 
talent. Because there is going to be requirements for talent in 
this transition that we don't currently have or are not 
generating enough of.
    So the economic opportunity for the industry as it 
transforms is one thing, and the talent opportunity, and 
building a more diverse and inclusive workforce along the way 
is something that is everybody--everybody is committed to. I 
think we are going in the right direction.
    The MEDC has got a new strategy, a new leadership, and it 
has got a new organization. We are very pleased by what we see. 
So we are on the right path right now.
    Senator Peters. Well, thank you, Mr. Stevens. Mr. Dawes, as 
was discussed, the issue of talent and the ability to make 
things is going to be critical for the future of Michigan. And 
in your written testimony, you mentioned that Michigan is the 
ideal location to grow domestic manufacturing because our 
workers are ready and, ``have unlimited time tested talent to 
offer.''
    And in the coming years, it won't be just auto 
manufacturing, it is going to be all sorts of advanced 
manufacturing, which will represent the future. Certainly, the 
semiconductor industry is a prime example of that future, and 
the need for folks who understand how to make things.
    If Congress passes the CHIPS Act, our country is going to 
start building lots of chip manufacturing plants, and there 
certainly is a concern out there as to whether or not we are 
going to have workers to fulfill those roles in these new 
manufacturing plants.
    So my question to you, sir, is can you talk about the kind 
of training and skills that Michiganders develop by working in 
the auto industry now or in other manufacturing settings, and 
how this demonstrates that we have the workforce that is ready 
to fill the needs for the semiconductor manufacturing industry 
as well?
    Mr. Dawes. Yes, absolutely. I can proudly sit here and tell 
you that I spent a lot of years working in the factory and 
representing workers, and I can tell you through our joint 
programs with the Big Three, and which actually filters down 
into our independent parts suppliers and our technical office 
professionals, is we take safety at the highest level.
    And that gets--everybody gets trained along with the 
different areas of assembly, repair, installation of equipment, 
and a skilled trade department, whether they are trained to 
bend pipe, to pull wire, or to work on model cons or 
programing, so much of our assembly equipment or our paint 
departments or whatever.
    So internally, we focus a lot on training and bringing 
people up to the next level so that when the new process comes 
in, they are trained and that they understand the process. And 
as that process moves forward, we continue to send them 
vehicles out the door at the highest quality.
    One prime example is in Flint, Michigan, we lobbied for a 
lot of the years with General Motors and General Motors 
invested in a brand new paint shop for a Flint truck assembly, 
which went from lacquer base and that type of paints to water 
based paint.
    And the sophistication and the pure technology that is in 
this place now is just--it will blow your mind from what are 
you used to seeing and what you would see today. And all of our 
folks were trained and spot ready when that equipment hit the 
floor, got bolted down, and started running trucks.
    Senator Peters. Right, right. Mr. Rathert, I would 
certainly like your commentary on this issue as well about some 
of the potential workforce synergies between folks who are 
involved in auto production and semiconductor production.
    Mr. Rathert. Yes, Senator. Semiconductor design and process 
engineering are engineering intensive. But when you walk inside 
a chip fab, the only thing that feels a little different is 
people are wearing these clean room suits, maybe you have seen 
pictures of this before, but ultimately it is really 
manufacturing, right at a very small scale, if you will. But 
there is still people moving materials, people controlling 
quality, smart trained workers bring these chips to life.
    I think the skills that Michiganders have based on 
manufacturing automobiles and your rich manufacturing history 
in other areas are just the types of skills that can be 
transformed and to fit into the chip world where we are 
building the chips themselves, building the equipment that does 
it, building the factories that make the chips. Michiganders 
are well equipped with your long history of building things to 
be successful.
    Senator Peters. Great, thank you. Mr. Stevens, as we have 
discussed, the growth of the auto industry and the impact on 
the country and the fact that it created the American middle 
class, there has certainly been incredible opportunities that 
have resulted from the industry. But all too often some 
communities are left behind, especially communities of color.
    And as we look to the years ahead and think about shaping 
opportunities for autoworkers, as well as in the semiconductor 
industry, which are good paying jobs in manufacturing, I would 
like your thoughts on what you are seeing in Michigan on this 
front, to have a very diversified work force, and how we can 
step up this important priority?
    Mr. Stevens. Well, I think, first of all, it is extremely 
important, and there is a focus on this, that we raise the 
educational attainment of all of our people in this State, and 
that means something post high school. It could be a welding 
certificate, it could be coding, it could be an advanced 
degree, but we need to raise that educational attainment level 
in Michigan.
    That is something the Detroit Regional Chamber is very 
committed to. In addition to that, the K-12 base level 
education is important. But beyond that, all of our citizens, 
whether they work in the industry 4.0 in the factory or they 
work on the connected vehicle, electric vehicle, they will need 
more digital skills.
    Every job classifications, digital skills score a rating, 
according to the Brookings Institute, continues to go up. So 
this is really essential for us as we prepare people. But I 
also think that, and we are seeing this right now, and I think 
Natalie's company with Dunamis Energy is a perfect example.
    Electrification, because of all of those different parts of 
the industry, provides an opportunity for more people to be 
participating in the economy of that electrification. And I 
think her company is a perfect example where they are going to 
build chargers here in Detroit.
    So we see these opportunities, but it is going to be 
incumbent upon us to prepare our youth with K through 12, to 
get the educational attainment, and to get the right alignment 
of skills for the industry demand, whether it be in the labs to 
fabs, a semiconductor plant, or a charging network plant, or a 
traditional automotive plant.
    Senator Peters. Thank you. Mr. Francis, I would like you to 
add your perspective from automakers on making the industry 
more diverse and more inclusive. What is your assessment of 
where we are, what more we need to do going forward?
    Mr. Francis. Certainly, Senator. I think--I would say that 
as we look toward the future and we look at what the technology 
development can really do--Mr. Dawes held up an XM radio 
module, Mr. Rathert held up his phone, Mr. Stevens talked about 
telecommunications, you talked about connectivity. And what I 
think this transformation can do is, it really is about 
connecting people. And while automation is not new, the speed 
of automation has certainly increased.
    And so it is incumbent upon us, and our members have taken 
to heart really looking at how communities are impacted, 
whether it is rural communities or disadvantaged communities or 
communities of color, both in terms of the workforce that they 
can attract in these times and in terms of the consumers that 
they can service in these times. So I think it is not just on 
one side, but it is on all of those sides.
    And I think that it is important that we continue to look 
at workforce training. It is important we continue to look at 
informing our young people about the path that they can take. 
You know, what are the opportunities that they might not have 
seen before? And so these are new things and these kinds of new 
jobs in the U.S. economy. We have seen with this whole new 
burst of technology that we have already seen new jobs and new 
skills.
    And for whatever skill level you might have. But I do 
think, as Mr. Stevens said, it is important that we begin to 
train our young people at an early age about the digital 
future, about the technology future, and retraining.
    You know, we have, you know, in this country, we have 
people working longer than ever and we have people who are 
capable, you know, well into their mature years, as we talked 
about mature nodes, that, you know, we do retraining that 
allows them to participate as well across the spectrum.
    Senator Peters. Right. Thank you. Thank you. Mr. Rathert, 
as you know, the Senate and the House have now both passed 
separate bills to fund chips, and I am hopeful we will get an 
agreement soon and we will be able to come together on a fairly 
large package and send it off to the President to be signed 
into law.
    So certainly, I believe it is essential so that the Federal 
Government can start implementing these incentives and boost 
domestic manufacturing, which will help everything we are 
talking about here today. But I believe we can't act soon 
enough. Statistics show that America share of global 
semiconductor manufacturing has dropped from 37 percent to just 
12 percent today, and that puts our economy, and as we have 
discussed, our National Security at risk.
    And as Congress works to finalize this funding, this 
important question, I have also introduced a bipartisan bill 
called the Investing in Domestic Semiconductor Manufacturing 
Act. My bill would ensure that CHIPS Act incentivizes--gives 
incentives to boost domestic semiconductor manufacturing to 
include U.S. suppliers that produce the materials and the 
manufacturing equipment that enables semiconductor 
manufacturing.
    By growing the domestic footprint of U.S. companies that 
produce essential materials and equipment, we can create more 
opportunity for manufacturers here in Michigan as well as 
across the country, certainly at the same time strengthening 
all of those supply chains. So I am glad that the House has 
taken up my language, and it is in the bill. Now, we are 
hopeful to get it in the complete package going forward.
    So my question for you, sir, is can you discuss how 
incentivizing the domestic construction of facilities to 
produce materials and semiconductor manufacturing equipment is 
a key part of the solution to shore up the supply chains, in 
addition to building the facilities where the semiconductors 
are actually manufactured?
    Mr. Rathert. Yes, Senator. And again, we are grateful at 
KLA for your leadership as well as that of your colleagues in 
the House and in this bicameral and bipartisan approach to the 
CHIPS Act and the surroundings supporting legislation. 
Semiconductors are constantly evolving. There is new materials, 
new methods, new packaging, it moves at a very rapid pace. One 
thing is constant though, that it gets harder with each node.
    Each change brings new challenges, new obstacles, what we 
like to call defects, and that is KLA's business. We are there 
to help. We can't rest. We can't make a misstep, which is why 
we personally invest heavily in R&D. But we can always raise 
the bar higher. America's equipment manufacturers, KLA, and our 
peer companies do have foreign competitors.
    We want to ensure that this equipment business stays here 
in America, that we are able to serve our domestic and overseas 
suppliers that are important for alleviating this chip 
shortage, and we believe the CHIPS Act is an important part of 
that.
    Senator Peters. Great. Thank you. Mr. Stevens, companies in 
Michigan are certainly positioned to fill some of the void of 
suppliers and equipment manufacturers and materials. Companies 
in Michigan like KLA are a prime example, who have recently 
located here. Thank you again for doing that. It is wonderful 
to hear. We also have Hemlock Semiconductor up in Saginaw, so I 
think this is--shows us that we have some great opportunities 
to increase this type of business in our State.
    So my question for you is, could you talk a little bit 
about how the CHIPS Act, and my specific proposal, could 
support economic development efforts here in Michigan through 
both the semiconductor industry as well as the auto industry 
really working together?
    Mr. Stevens. Yes. Well, it is really important that we 
focus on what is needed for a company to make a decision to 
either grow the business that is already here or to come here. 
And of course, there is a myriad of factors around that. The 
business climate is important, and there are a lot of things 
that go with the business climate. The incentive climate is 
important. There is a lot of things that go with that too.
    Your specific legislation with regards to full funding from 
the Act and also the supplemental $2 billion to work with 
Select USA is extremely critical to let and enable economic 
development. And then, really the critical factor is talent. So 
when Michigan looks at what it has and what it needs to do, 
these Acts all help in their own way, but all complementary 
together, as I referenced in my testimony, they work together 
to provide an opportunity for Michigan.
    So it puts us in the game because of our know-how from an 
engineering design manufacturing standpoint, but also because 
we innovate here. You know, there are more telecommunications 
patents that come out of this region than anywhere in the 
country, including Silicon Valley. So there is a lot of 
innovation that goes on here, too. But, you know, we complement 
what you put forward, and we hope it all becomes a reality 
because it will help Michigan.
    Senator Peters. Alright, thank you. Mr. Francis, I 
mentioned in my opening remarks how injuries and deaths on our 
roads have been unfortunately rising. And considering that 
human error is usually the major factor in those crashes, if we 
can remove the human driver, autonomous vehicles certainly hold 
an incredible promise of 1 day to significantly reduce these 
injuries and deaths, but it is certainly going to take some 
time before we get to full autonomy.
    But in the meantime, there are a number of other 
technologies that are being rolled out that get us on that 
path, things from lane departure warnings to automatic 
emergency braking, all of these new technologies are going to 
save lives. But they all require sophisticated software, all 
require semiconductor chips, once again.
    So my question for you, sir, is how will securing our 
supply chains for semiconductor chips facilitate the 
development of life saving technologies that fall short of 
automation, but also called advanced driver assistance systems 
as we wait for the fully autonomous future?
    Mr. Francis. Yes, thank you, Senator. Safety is at the 
heart of what our suppliers and automotive makers are doing 
every day. You know, it is really job one. And so we have 
always been investing in technologies that would improve 
safety. And so making sure that we are able to have the supply 
chain that produces the things necessary on a consistent basis 
is really important. I mean, as Mr. Dawes mentioned, you know, 
there are choices having to be made about things that are going 
into vehicles.
    And those are somewhat, you know, comfort things. But the 
safety critical systems are the things that we continue to 
focus on, and we have not been compromised in any way in those 
things. And so I think our members continue to look at these 
safety critical technologies and these advancements of being 
able to provide these at all levels for our consumers to make 
sure that they are in place.
    And so making sure that we have a robust, resilient, 
reliable domestic supply chain that will provide the 
semiconductor chips and the things we need to be able to 
continue these advancements is extremely important. And in the 
legislation that you put forward and that your bipartisan 
support that you have led is really important, a signal from 
the Government, a signal from your colleague that says, you 
know, we are putting safety at the forefront.
    Safety technologies are extremely important. So we want to 
continue to work with you to make sure that we are able to 
continue to lead the Nation and lead the world in implementing 
new safety technologies.
    Senator Peters. Well, I appreciate that. Thank you. Thank 
you, Mr. Francis, for those comments. Mr. Stevens, as we are 
talking about autonomous and AVs, I think the question--there 
isn't the question of if we are going to get there, it is 
coming. It is just a matter of what time, timeframe. But the 
outstanding question that we have to resolve and one that I am 
very passionate about is whether or not the United States will 
maintain its leadership in the development of autonomous 
vehicles or are we going to cede this ground somewhere else?
    And we can't do that. It has to be here in the United 
States. But in order for the United States to dominate the 
future, we have to have laws and regulations that actually 
facilitate the safe development of these autonomous vehicles. 
As you are well aware, our current regulatory frameworks are 
simply outdated. They are not designed to deal with self-
driving cars. They always assume there is a human as a driver, 
and that is a good assumption right now. That is totally 
accurate.
    But things will change in the years ahead. And certainly, I 
am going to continue to work on legislation to modify those 
regulations. But my question to you, Mr. Stevens, could you 
expand on the economic impact that autonomous vehicles will 
have on Michigan? And quite frankly, what will happen if we 
lose our leadership in autonomous vehicles?
    Mr. Stevens. Certainly. While we are always proud to say 
that Michigan is an epicenter, a global epicenter for mobility, 
but we are also not so naive to think that everybody doesn't 
want to be that global epicenter, too. And so that has been why 
we have been focused since really 2015 as a state to bring 
together the parties. Policy has been at the forefront of it. 
Michigan has, under Governor Snyder and now under Governor 
Whitmer, maintained its focus on making sure we have the most 
progressive, safety first policy for autonomous vehicle 
development.
    Now, a lot of the attention and focus on the autonomous 
vehicles actually dimmed a little bit from the beginning of the 
pandemic, and there is no question about that. Many companies 
didn't put the R&D in the last couple of years, but the 
companies that are core to this industry, Cruise Automation, 
Waymo, Argo, Aurora, and the Chinese, and also some of the 
Europeans, have not stopped the focus on this.
    Number one, because it can save lives. We know that this 
technology can really, really benefit deaths from the roads 
from that standpoint. But the economic opportunity and 
monetization when you look at the development of advanced 
driver assistance systems is huge. So that is why we are so 
focused on here in Michigan.
    But like all the other things we have talked about today, 
it is incumbent and critical for America to make sure that we 
protect the intellectual capital, make sure it is developed 
here and stays here, and that we control not just it from a 
National Security standpoint, but an economic opportunity 
standpoint also.
    Senator Peters. Great. Thank you. Mr. Francis, I know you 
think a lot about this as well. What do we need to do to make 
sure it stays in the United States?
    Mr. Francis. Well, Senator, I think that, you know, good 
public policy is important. You know, creating opportunities 
for, you know, testing and deployment, making sure that, you 
know, communities have what it takes to do these types of 
things. And at AV Roadmap, one of the things that we had 
suggested is, you know, updates to what we call the manual of 
uniform traffic control devices.
    And that is, you know, providing grants for a wide range of 
communities for widespread testing and deployment, both rural 
and urban. So it is creating those types of policies that match 
the investment that our companies are putting into it, that 
allows them to begin to get these things on the road. Because 
as you mentioned, it has an incredible opportunity for opening 
up personal mobility for all different types of communities.
    And so, you know, if we are going to make sure that, you 
know, we are leading the world and leading the nation, we need 
to make sure that we are manufacturing the components here, 
that we are creating test beds here, that we are creating 
opportunities for deployment here that can showcase what 
autonomous technology can do.
    And that is going to be an incremental change. It is not 
going to be overnight. We know that. And so that is the thing 
that will allow consumers and suppliers and everyone to 
participate in that transition.
    Senator Peters. Alright, thank you. Certainly, we are in a 
very transitory time. Change is happening quickly. And my 
question for you, Mr. Dawes, is we want to make sure workers 
are fully prepared for these changes and share in the 
opportunities that are there.
    So if you could elaborate, you have already discussed it 
somewhat, but if you could elaborate on how Congress 
specifically can support workers to ensure that they have the 
preparation necessary to embrace this future when it comes to 
technological changes, changes that we can't even probably 
predict today. Things are going to be different a week or a 
month from now. What more can Congress do to help workers?
    Mr. Dawes. Well, I think some of what Congress can do is, 
when people get educated on a change or educated on a purpose, 
they understand it more. And when they understand more, they 
embrace it more and they realize that, hey, this is going to be 
part of my life. This is going to be where we are going to go.
    I think the investment in American people is huge. I think 
that shows the leadership that shows by example that we know 
you can do it. We have the faith you can do it. You have shown 
over time that you have done it in the history of this country, 
time after time, after time. This is no different, we are just 
going into a little different--little different program than 
what we are used to.
    And we are counting on you, America. We are counting on 
you, the men and women in this proud, great country. So we are 
willing to show you and give you the tools for your toolbox. 
Let's do it.
    Senator Peters. Very good. Amen. That is all I will say to 
that. So I appreciate all of your testimony. One last question 
as we wrap up. This time has gone by very quickly. And my last 
question is for you, Mr. Rathert. As I have mentioned, Michigan 
is very proud to have welcomed your company to Ann Arbor.
    And when we look at the semiconductor industry and how it 
makes investments, we tend to see a pattern of clusters, which 
is not unusual to the semiconductor industry, fairly typical of 
all industries.
    Companies always gain synergies by being close to one 
another. So my question to you, sir, is, with KLA helping lead 
the way here in Michigan, how do you think Michigan can 
leverage your presence in Ann Arbor to grow the semiconductor 
industry footprint here in Michigan?
    Mr. Rathert. I believe when the word gets out about the 
skilled workers that KLA is finding here in Michigan, with the 
talent and the capability and the success we are going to 
demonstrate here, as well, frankly, as some of the cost 
savings, the cost benefits of being here in Michigan, I think 
it will take on a life of its own, frankly, Senator. But 
certainly welcome any kind of efforts to advance that through 
the Chamber of Commerce here or with our partners with the 
Michigan Economic folks.
    We are happy to partner with them and highlight our success 
here. We are sure it is going to have a very successful outcome 
and that should just naturally bring some of our peer companies 
here when the word gets out.
    Senator Peters. Well, we welcome your success. Success 
breeds success, and so we will continue to build on that. 
Before I wrap up today's hearing, I would like to address some 
administrative issues.
    First off, the hearing record will remain open for 2 weeks 
until April 11th of 2022. Any Senators or others who would like 
to submit questions for the record, should do so by April 11th. 
And we ask that witnesses provide responses to the Committee as 
quickly as possible, but no later than April 25th.
    With that said, in closing, I guess the question is what 
have we all learned here today? At first, I would say we all 
know that automobiles already depend heavily on chips. In the 
future, this trend will only continue, and we cannot achieve an 
electric or an autonomous future or the safety, as well as the 
environmental benefits of these vehicles without a secure 
supply of semiconductor chips.
    Second, our supply chains are or at least they were before 
the pandemic, efficient, but they clearly are not resilient. 
For too many essential goods, including chips, we rely too 
heavily on foreign suppliers, including suppliers who are often 
located in unstable parts of the world or are controlled by our 
adversaries.
    This means our supply chains are subjected to numerous 
risks abroad, including from transnational shipping, which can 
have absolutely devastating consequences. Indeed, we have seen 
with the pandemic with medical supplies and with automobile 
manufacturing, it is not an understatement to say that these 
risk gravely threaten our National Security as well as our 
economy.
    So then that leads to the next question, so what is the 
solution? And I think we need to make things here in America 
and I think hopefully all of you would agree, and I want to 
make them in Michigan specifically, but America, then Michigan 
first and foremost.
    And that is why I have worked to grow the domestic auto 
production and tackle issues related to the chip shortage by 
fighting for funding to make chips in the United States, in 
addition to onshoring semiconductor supply chains through 
legislation I authored, which has now passed through the House.
    The bottom line is we have the greatest workers in the 
world, the greatest drive for innovation, and certainly, I 
think, the greatest potential of any nation on the Earth. We 
need electric and autonomous vehicles to save our planet, as 
well as to save lives on the road, and we need to make them 
here in the United States of America.
    If we need pharmaceuticals, medical devices, and vaccines 
to stay healthy, we should be making those in America as well. 
And if we need chips to stay competitive in the global economy, 
we need to make them in America. The entrepreneurial spirit and 
the work ethic of our State and nation literally built the 
American middle class and helped make America the superpower in 
the 20th century.
    And in the 21st century, we have everything we need to 
succeed here at home. And that is why I will continue to fight 
for the future. I want to certainly thank our participants who 
I know share that vision too, to fight for the future, and to 
continue to support the United States and our manufacturing 
abilities as the greatest nation on Earth.
    So thank you for your participation here today. We will now 
conclude this hearing. This hearing is now adjourned.
    [Whereupon, at 11:30 a.m., the hearing was adjourned.]

                            A P P E N D I X

    Response to Written Question Submitted by Hon. Amy Klobuchar to 
                      Robert J. Rathert, Sr. (Jay)
    Semiconductor Workforce. Semiconductor companies frequently compete 
for a specialized pool of talent. The U.S. will need 70,000 to 90,000 
workers or more to be added by 2025 to meet critical workforce needs.

    Question. What additional investments could Federal and state 
governments be making in education and training, and what current 
programs could be expanded or modified, to support the semiconductor 
workforce?
    Answer. Senator Klobuchar,
    Thank you for your concern regarding this important issue.
    Success in the semiconductor industry requires more than just 
building factories. All aspects of this industry--from device design, 
to the advanced equipment needed to fabricate the chips, to nanoscale 
manufacturing in the fab--are knowledge-intensive, operating at the 
frontiers of science and technology.
    Advanced semiconductor devices have 800 or more complex, nanoscale 
manufacturing steps. Each process step must be designed and performed 
perfectly for the chip to function. Semiconductor technology evolves 
rapidly and innovation based on the experiences of past successes and 
failures is critical for timely development of a viable, competitive 
capability. Applicable expertise is critical.
    For America to lead again in this growing and strategic market, we 
will need both near-term and long-term plans to develop, attract and 
retain the requisite skills, innovation and experience to ensure 
success here at home. There are legislative implications for both 
education and immigration.
    To add an additional 70,000 to 90,000 semiconductor workers by 2025 
(<3 years) requires attracting a combination of existing skilled 
workers, as well as those nearing completion of their studies.
Near-term recommendations
    Semiconductor companies rely heavily on workers with advanced STEM 
degrees in their new-hire pool. Within KLA US, 30 percent of our 
workers have a masters or PhD degree, more than twice that of the 
normal U.S. population aged 25 or greater.\1\ The complexity of chip 
design, equipment development and nanoscale manufacturing requires 
cutting-edge engineering and analytical skills to understand and 
manage. The U.S. produces approximately 34,000 PhD graduates each year 
across all STEM fields of study, of which 42 percent are international 
students.\2\
---------------------------------------------------------------------------
    \1\ U.S. Census Bureau
    \2\ U.S. Universities Fall Further Behind China In Production Of 
STEM PhDs, Forbes, Aug 7, 2021

   Domestic advanced STEM degree students- These candidates are 
        in heavy demand, often seeking employment in high-profile 
        American companies, such as Apple or Google. Targeted grants or 
        scholarships--or novel ideas such as making student loan 
        payments tax deductible for advanced degrees finding employment 
        in the semiconductor field--could make the semi sector more 
        attractive for U.S. citizens. Semiconductor engineers become 
        high-earners, allowing the U.S. to recoup the deferred tax 
        dollars in future years.
Mid-term recommendations
    To support the successful growth of the U.S. semiconductor industry 
in the mid-term, the U.S. should prioritize opportunities to develop 
the available talent pool over the longer 3-7 year time horizon.

   Career transition: Congress and industry should partner 
        through hiring incentives and educational credits or subsidies 
        to transition interested, existing mid-career domestic workers 
        with the appropriate fundamental engineering, technical, 
        manufacturing or military backgrounds into semiconductors. 
        Fellowships, apprenticeships and other training programs that 
        invest in developing the skills needed for long-term success 
        are important enablers of this path of workforce development

   U.S. undergraduates seeking advanced STEM degrees:

     In conjunction with industry, the Federal government 
            should assist in boosting awareness of the critical and 
            growing role that semiconductors play in our lives and 
            economy, generating interest in potential careers in this 
            strategic industry.

     Universities could guarantee admission to graduate 
            engineering programs for their undergraduate engineers with 
            a minimum target GPA to continue their momentum and reduce 
            barriers to progress for the best candidates.

     Incentives that encourage undergraduate workshare/co-
            op programs and internships could bring semiconductor 
            companies and interested young talent together, leading to 
            company-funded graduate-education opportunities for the 
            best long-term prospects

     Congress could put temporary, targeted incentives 
            (i.e., student aid, grants, zero-interest loans, loan 
            forgiveness or tax benefits) into the hands of 
            undergraduate students if they choose advanced STEM degrees 
            in relevant areas, including physics, computer science, 
            electrical engineering and materials science. This would 
            make these fields of study more attractive to U.S. 
            students. Commitment to work within the semiconductor field 
            for a predefined number of years could be a requirement to 
            realize these benefits.

   Hi-tech skilled manufacturing: Every semiconductor company 
        has need of many skilled supporting workers for jobs that don't 
        require advanced degrees. Operators and technicians in the fab 
        and assemblers in the equipment industry are the semiconductor 
        equivalent of workers on the factory manufacturing floor. These 
        workers need training to be successful in the complex, ``clean-
        room'' environment and these skills could be developed in 
        state-level community colleges and certificate programs, 
        private trade colleges, or apprenticeships that provide on-the-
        job training. Those states with schools located near U.S. chip 
        or equipment manufacturing could provide skills that create a 
        ready pipeline of capable U.S. workers for high paying, high-
        tech jobs. Just as Michigan attracted a new HQ and 
        manufacturing facility from KLA, states with an abundance of 
        skilled manufacturing resources can find a win-win with other 
        companies in the semiconductor industry.
Longer term recommendations
    America must develop the core of our future talent pool at home 
over the next 7-10 year time horizon and beyond.
    In conjunction with industry and academia, the U.S. should expand 
our investment in a National Semiconductor R&D Center to compete with 
Europe's IMEC as a premier open source development center for 
technology and talent. (i.e., Albany Nanotech or equivalent). America's 
existing leadership in innovation and R&D could be leveraged into 
advantage for domestic manufacturing that creates jobs and opportunity 
here at home.
    The U.S. should also invest in leading engineering universities to 
expand their STEM graduate programs and laboratory facilities for 
advanced semiconductor studies to increase our domestic capacity to 
produce PhDs with the necessary skills. Taiwan recently committed $338 
million to increase their capacity of semiconductor PhDs.\4\
---------------------------------------------------------------------------
    \4\ Asian universities step up semiconductor programmes, University 
World News, Yojana Sharma, Oct. 22, 2021
---------------------------------------------------------------------------
    Through educational policy at the secondary school level, the U.S. 
should direct science or physics curricula to include exposure to 
fundamentals of transistors, chips, circuit design and programming 
within programs that appeal to youth, such as robotics. The U.S. should 
create additional advocacy and awareness for STEM through afterschool 
science programs, mentorship, and interschool science-related 
competitions. Where feasible, creating specialized science and 
technology affinity-schools within school districts is alternative way 
to attract and develop nascent talent in an immersive, science-centric 
environment. Improving U.S. student performance in science and math is 
a prerequisite for success in creating a larger pool of advanced degree 
students. KLA encourages a broader discussion with Congress, education 
experts and industry leaders to create a plan for national-level 
success.
Summary
    Just as the instruments alone don't make the orchestra, neither is 
simply funding new chip factories sufficient to restore America's 
semiconductor leadership.
    Along with a fair and hospitable business environment and ongoing 
R&D investment, having the right talent is a critical component if 
America is to be successful in reversing the trend of semiconductor 
technology innovation and manufacturing capacity moving overseas.
    To protect America's economic and strategic interests, we must 
attract, retain and develop our own pool of engineers and skilled 
workers in this increasingly competitive international market if we're 
to successfully staff America's future semiconductor fabs.

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