[Senate Report 117-109]
[From the U.S. Government Publishing Office]
Calendar No. 222
117th Congress} { Report
SENATE
2d Session } { 117-109
======================================================================
SECURING SEMICONDUCTOR SUPPLY CHAINS
ACT OF 2021
__________
R E P O R T
OF THE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ON
S. 3309
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
May 17, 2022.--Ordered to be printed
__________
U.S. GOVERNMENT PUBLISHING OFFICE
WASHINGTON : 2022
-----------------------------------------------------------------------------------
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
one hundred seventeenth congress
second session
MARIA CANTWELL, Washington, Chair
AMY KLOBUCHAR, Minnesota ROGER WICKER, Mississippi
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 Virginia
RAPHAEL WARNOCK, Georgia RICK SCOTT, Florida
CYNTHIA LUMMIS, Wyoming
Lila Helms, Staff Director
John Keast, Minority Staff Director
Calendar No. 222
117th Congress} { Report
SENATE
2d Session } { 117-109
======================================================================
SECURING SEMICONDUCTOR SUPPLY CHAINS ACT OF 2021
_______
May 17, 2022.--Ordered to be printed
_______
Ms. Cantwell, from the Committee on Commerce, Science, and
Transportation, submitted the following
R E P O R T
[To accompany S. 3309]
[Including cost estimate of the Congressional Budget Office]
The Committee on Commerce, Science, and Transportation, to
which was referred the bill (S. 3309) to require SelectUSA to
coordinate with State-level economic development organizations
to increase foreign direct investment in semiconductor-related
manufacturing and production, having considered the same,
reports favorably thereon with an amendment (in the nature of a
substitute) and recommends that the bill (as amended) do pass.
PURPOSE OF THE BILL
The purpose of S. 3309, the Securing Semiconductor Supply
Chains Act of 2021, is to direct the Executive Director of the
SelectUSA program of the Department of Commerce (Executive
Director) to gather and analyze information for a report to
Congress about leveraging foreign direct investment (FDI) to
bolster domestic supply chains for semiconductors.
BACKGROUND AND NEEDS
Semiconductors--also referred to as integrated circuits or
chips--are essential to numerous goods and services that play a
significant role in the Nation's economy, from farm equipment
and cars\1\ to smartphones, computers, aviation, wireless
communication, and more.\2\ A recent shortage of
semiconductors, driven by a global pandemic and other factors,
has threatened economic growth and countless jobs.\3\ These
events exposed vulnerabilities in supply chains for
semiconductors and highlighted the important role they play in
the economy.\4\
---------------------------------------------------------------------------
\1\Dan Crisler, ``Chip Shortages Make for `Frustrating' Environment
for Vehicle and Ag Equipment Dealers,'' Omaha World-Herald, September
30, 2021 (updated November 6, 2021) (https://omaha.com/news/state-and-
regional/chip-shortages-make-for-frustrating-environment-for-vehicle-
and-ag-equipment-dealers/article_70d7cdc2-1b0a-11ec-a5a8-
672f401c1196.html).
\2\PricewaterhouseCoopers, The Internet of Things: The Next Growth
Engine for the Semiconductor Industry, 5, 18, May 2015) (https://
www.pwc.com/gx/en/technology/publications/assets/pwc-iot-semicon-paper-
may-2015.pdf).
\3\Daniel Howley, ``What the Chip Shortage Means for the US
Economy,'' Yahoo! Finance,
April 22, 2021 (https://news.yahoo.com/what-the-chip-shortage-means-
for-the-us-economy-152607880.html); see also Jack Ewing and Patricia
Cohen, ``How Car Shortages Are Putting the World's Economy at Risk,''
The New York Times, November 2, 2021 (https://www.nytimes.com/2021/11/
02/business/car-shortage-global-economy.html).
\4\Saif M. Khan et al., Center for Security and Emerging
Technology, The Semiconductor Supply Chain: Assessing National
Competitiveness, January 2021 (https://cset.georgetown.edu/wp-content/
uploads/The-Semiconductor-Supply-Chain-Issue-Brief.pdf).
---------------------------------------------------------------------------
Advances in semiconductor technologies are driving
innovations that will shape the future of the global economy
and military power, such as artificial intelligence, 5G
wireless communication systems, and quantum computing.\5\
Ensuring that semiconductor supply chains can reliably fulfill
the country's needs for semiconductors is necessary to the
Nation's economic and national security.\6\
---------------------------------------------------------------------------
\5\FP Analytics, ``Semiconductors and the U.S.-China Innovation
Race,'' Foreign Policy, February 16, 2021 (https://foreignpolicy.com/
2021/02/16/semiconductors-us-china-taiwan-technology-innovation-
competition/).
\6\Ibid.
---------------------------------------------------------------------------
To that end, the Administration published a report in June
2021 that analyzed supply chains for semiconductors, among
other critical goods, and provided recommendations to make them
more resilient.\7\ The report suggested that the SelectUSA
program of the Department of Commerce could be leveraged ``to
attract investment in semiconductor manufacturing supply
chains.''\8\ The SelectUSA program helps foreign and U.S.
businesses located abroad to invest in the United States by
offering various research and counseling services, as well as
by working with State-level economic development organizations
(EDOs).\9\ With these capabilities, the Administration noted
that the SelectUSA program is positioned to help strengthen the
domestic semiconductor manufacturing ecosystem by fostering
related investment in the United States.\10\
---------------------------------------------------------------------------
\7\Biden Administration, Executive Office of the President of the
United States, Building Resilient Supply Chains, Revitalizing American
Manufacturing, and Fostering Broad-Based Growth, June 2021 (https://
www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chain-
review-report.pdf).
\8\Ibid. at 77.
\9\Ibid.
\10\Ibid. at 23.
---------------------------------------------------------------------------
LEGISLATIVE HISTORY
S. 3309 was introduced on December 2, 2021, by Senator
Peters (for himself and Senator Scott of Florida) and was
referred to the Committee on Commerce, Science, and
Transportation of the Senate. Senator Blackburn cosponsored the
bill on December 9, 2021. On December 15, 2021, the Committee
met in open Executive Session and, by voice vote, ordered S.
3309 reported favorably with an amendment (in the nature of a
substitute).
ESTIMATED COSTS
In accordance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 403 of the
Congressional Budget Act of 1974, the Committee provides the
following cost estimate, prepared by the Congressional Budget
Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 27, 2022.
Hon. Maria Cantwell,
Chair, Committee on Commerce, Science, and Transportation,
U.S. Senate, Washington, DC.
Dear Madam Chair: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 3309, the Securing
Semiconductor Supply Chains Act of 2021.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is David Hughes.
Sincerely,
Phillip L. Swagel,
Director.
Enclosure.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
S. 3309 would direct the Department of Commerce (DOC),
through its SelectUSA program, to solicit comments from state
economic development organizations about how to support foreign
direct investment in semiconductor production. The bill also
would require the department to report to the Congress on the
comments and strategies that SelectUSA may implement to
increase such investment.
Using information from DOC, CBO expects the department
would need two employees and six contractors ove the 2022-2024
period to carry out the comment solicitation process and
complete the required report. On that basis, CBO estimates that
implementing S. 3309 would cost $4 million over the 2022-2026
period; such spending would be subject to the availability of
appropriated funds.
The CBO staff contact for this estimate is David Hughes.
The estimate was reviewed by H. Samuel Papenfuss, Deputy
Director of Budget Analysis.
REGULATORY IMPACT STATEMENT
Because S. 3309 does not create any new programs, the
legislation will have no additional regulatory impact, and will
result in no additional reporting requirements. The legislation
will have no further effect on the number or types of
individuals and businesses regulated, the economic impact of
such regulation, the personal privacy of affected individuals,
or the paperwork required from such individuals and businesses.
CONGRESSIONALLY DIRECTED SPENDING
In compliance with paragraph 4(b) of rule XLIV of the
Standing Rules of the Senate, the Committee provides that no
provisions contained in the bill, as reported, meet the
definition of congressionally directed spending items under the
rule.
SECTION-BY-SECTION ANALYSIS
Section 1. Short title.
This section would provide that the bill may be cited as
the ``Securing Semiconductor Supply Chains Act of 2021''.
Section 2. SelectUSA defined.
This section defines the term ``SelectUSA'' to mean the
SelectUSA program of the Department of Commerce established by
Executive Order 13577.\11\
---------------------------------------------------------------------------
\11\Executive Order 13577, Federal Register, vol. 76, no. 118,
35715-35717, June 20, 2011 (https://www.federalregister.gov/documents/
2011/06/20/2011-15443/establishment-of-the-selectusa-initiative).
---------------------------------------------------------------------------
Section 3. Findings.
This section provides congressional findings related to
supply chains for semiconductors, noting the importance of
semiconductors to the U.S. economy and the economic recovery,
identifying areas that can benefit from further investment--
such as advanced manufacturing, packaging, and materials and
equipment--and opportunities for FDI to help grow domestic
manufacturing.
Section 4. Coordination with State-level economic development
organizations.
This section would require the Executive Director to
solicit comments from State-level EDOs about their efforts to
boost FDI in domestic semiconductor-related production, among
other relevant topics. These comments would serve to develop
recommendations to SelectUSA on increasing FDI in domestic
semiconductor-related production, either independently or in
partnership with EDOs.
Both the Federal Government and outside experts have raised
concerns that agreements related to foreign investment can
enable foreign individuals to ``exploit ownership in U.S.
companies by misappropriating sensitive data and information in
ways that might be detrimental to US national security.''\12\
Congress has, therefore, directed the Chairman of the Committee
on Foreign Investment in the United States to work with allies
and partners to protect U.S. national security interests.\13\
This section further specifies that the Executive Director
should leverage EDO feedback to develop recommendations on
working with U.S. allies or partners of the United States--
which could include semiconductor manufacturing leaders such as
the Netherlands or South Korea--to ensure that U.S. attempts to
increase FDI do not advantage foreign adversaries. The term
``foreign adversaries'' has the same meaning as in section
8(c)(2) of the Secure and Trusted Communications Networks Act
of 2019.\14\
---------------------------------------------------------------------------
\12\Deloitte, Committee on Foreign Investment in the United States
(CFIUS) Monitoring and Assessment Services, 1, 2021 (https://
www2.deloitte.com/content/dam/Deloitte/us/Documents/risk/us-committee-
on-foreign-investment-in-the-us-cfius-monitoring-and-assessment-
services-2021.pdf).
\13\Foreign Investment Risk Review Modernization Act of 2018,
Public Law 115-232, sections 1701-28, 132 Stat. 2174.
\14\Secure and Trusted Communications Networks Act of 2019, section
8(c)(2), 47 U.S.C. 1607(c)(2) (defining the term ``foreign adversary''
to mean ``any foreign government or foreign nongovernment person
engaged in a long-term pattern or serious instances of conduct
significantly adverse to the national security of the United States or
security and safety of United States persons'').
---------------------------------------------------------------------------
Section 5. Report on increasing foreign direct investment in
semiconductor-related manufacturing and production.
This section would require the Executive Director, in
coordination with the Federal Interagency Investment Working
Group,\15\ to submit a report about semiconductor supply chains
to the Committee on Commerce, Science, and Transportation of
the Senate and the Committee on Energy and Commerce of the
House of Representatives. This section would direct the
Executive Director to narrow the report based on comments
received from EDOs pursuant to section 4, to describe related
work SelectUSA is conducting, and to assess strategies--at the
Executive Director's discretion--that SelectUSA could implement
to increase investment that helps secure U.S. semiconductor
supply chains for the United States.
---------------------------------------------------------------------------
\15\Executive Order 13577, Federal Register, vol. 76, no. 118,
35715-35717, June 20, 2011 (https://www.federalregister.gov/documents/
2011/06/20/2011-15443/establishment-of-the-selectusa-initiative)
(establishing the Federal Interagency Investment Working Group
consisting of senior officials from several agencies tasked with
coordinating activities to promote business investment among other
related functions).
---------------------------------------------------------------------------
CHANGES IN EXISTING LAW
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, the Committee states that the
bill as reported would make no change to existing law.
[all]