Biden to decide on grants to foreign chipmakers, Raimondo says

President Joe Biden will ultimately decide whether foreign chip producers will receive some of the $52 billion in funding planned to help ease the shortage that has hammered manufacturing, Commerce Secretary Gina Raimondo said.

Biden will make the determination on whether to direct funds to only U.S.-headquartered companies after the administration’s internal policy discussions are completed, Raimondo said in an interview Wednesday with Bloomberg editors and reporters in Washington.

“That decision hasn’t been made, and that’s a decision that will go right to the president,” Raimondo said. “We’ll make a recommendation, but I expect before we make any final decisions around which companies, can we work with non-U.S. companies, that’ll go through a big process. And ultimately I think we’ll sit down with President Biden and have that discussion.”

While the U.S. still leads the world in semiconductor design, it’s almost entirely reliant on China and Taiwan for production. Chipmakers are cranking up output to address shortages that have hampered automakers and other customers as they try to emerge from the coronavirus pandemic.

The Biden administration is laying the groundwork to spend roughly $52 billion on semiconductor research and manufacturing even as it’s awaiting congressional approval of the funding, Raimondo said last week.

Raimondo on Wednesday alluded to geopolitical risks as one of the reasons to ease U.S. reliance on chip production in Taiwan, which Beijing views as part of its territory that will be reunited by force if necessary. China opposes any official contact between the U.S. and Taiwan.

“We’re extremely reliant on Taiwan, which is at the moment an ally,” she said.

Such geopolitical risks are part of the analysis being done to decide which companies receive government grants, she said, adding that the administration also considers climate change in its plans for a diversified, resilient supply chain.

Raimondo is working with the European Union to map out the supply-chain vulnerabilities and said the allies will come up with a coordinated approach on incentivizing domestic production of chips to ensure their efforts complement each other.

She chairs the supply-chains working group of the recently announced Trade and Technology Council, and her first meeting with EU counterparts is set for late September in the U.S.

“We’re going to map all of that out and make sure that the United States has access to all parts of that supply chain, either in this country or in an allied country,” she said. “Some people call it friend-shoring, some people call it near-shoring, allied shoring, but the next best thing to America is Europe or one of our allies, and so that’s why we have a whole working group of the TTC.”

The Commerce chief said she hopes the working group will come up with a coordinated plan “soon” but she’s simultaneously focused on getting the House to pass legislation to fund the $52 billion grant program. Her agency is providing technical assistance to committees in the chamber and her hope is that lawmakers introduce the measure before they go on recess Friday.