Joe Biden's administration defined that a military company be the first to receive the federal grant from the Chips and Science Act. The decision is not accidental. It encloses a message: Semiconductor production also involves US national security. The company BAE Systems, a specialized defense contractor, will receive an incentive to boost national semiconductor manufacturing. With those $35 million, BAE Systems will quadruple its production of a type of chip used in combat aircraft, satellites and other defense systems. This allocation is the first of several that will be finalized in the coming months. The Department of Commerce will be in charge of distributing the $39.2022 million that Congress authorized when passing the Chips and Science Act. These federal funds aim to multiply chip factories in the United States and avoid foreign dependence.
The US invented semiconductors, which are fingertip-sized computer chips that power everything from cell phones to cars, weapons and satellites. But due to global specialization, specifically in places like Taiwan, the United States gave way to prominence. It went from producing almost 40% of the world's chips to just over 10%.
In an exclusive dialogue with LPO, the Undersecretary of Commerce for Economic Development gives details about the White House's commitment. Daughter of Dominican immigrants, Alejandra Castillo also gives her opinion on the tension with China, the impact of inflation and immigration policy.
How did the implementation of the Chips and Science Law begin?
The Chips and Science Act is extremely important and one of the four pillars of the investment agenda of the Biden-Harris administration. Chips and Science is really an opportunity for the government to reintroduce an extremely important industry. An industry that was forged, as I like to say, under US technology and innovation.
What is the importance of semiconductors?
The pandemic showed us the shortage that existed in relation to semiconductors. Sometimes we don't realize it, but much of what we use on a daily basis, when using our vehicle, our televisions, even our refrigerators, have some type of semiconductor. So it was necessary not only to recover that industry, but to begin forging the next generation of semiconductors. It is important in terms of economic development, but also in terms of US competitiveness and national security.
How will the application of the Law continue after the award to BAE Systems?
The program is being developed in stages. This is a fairly complex development. We need the collaboration and cooperation of the federal government and the private sector. And what we just saw, with this week's announcement, is that we are collaborating with the private sector to provide those incentives. At the end of the day, it's about the industry but it also aims to create new jobs. Jobs that will have better and higher paying. Economic dynamics are also encouraged from small businesses that will be part of the supply chain in that industry per se.
Why this first allocation to a Defense company?
The logic is that it is legislation based on economic growth and national security. That is important. The pandemic gave us perspective and revealed that we had certain vulnerabilities, areas that we needed to reinforce and that is why this legislation is given in its entirety.
Is China advancing on Taiwan, a key semiconductor supplier, a possible vulnerability?
Obviously that can be a consideration, but what I would say is that the US maintains its competitiveness in that sector, which impacts not only Defense, but also items of utmost importance in our daily lives. So it gives us a chance to bring back an important industry, as well as forge innovations to create the next generation of semiconductors and help protect our nation.
After being a pioneer in the production of semiconductors, the United States production fell to 10% of the world. How and how long do you plan to reverse this decline?
There are many plans for the future. Here, at the Department of Commerce we have a team that is completely focused on everything that is Chips. We also have to remember that this legislation is called Chips and Science. For me, the Economic Development Administration has another important component called "tech hubs." That program was announced by the president a month ago. We have designated 31 locations across the country to be established as tech hubs. The importance of the Law is also seen there. We will focus on 10 technologies, what we call critical technologies, where the US wants to keep movement and innovation. It includes cyber security, quantum computing, biotechnology. The Biden administration is investing in places and areas that had been forgotten for many years. And resuming an opportunity to strengthen our competitiveness in various sectors and also protect our national security.
To what extent is it convenient to be globally competitive for the US, without implying a drastic drop in national wages?
This harmony is always achieved by staying at the forefront. Having new technologies, advancing in areas that the rest of the world may not have anticipated. It is achieved by maintaining predominance in technological areas, while the US has not only academic spaces, but also has national laboratories and agreements with the private sector. The standards we maintain are those that sustain our competitiveness, so that's where we go. This way we can train a workforce that leads to employability that, at that level, will be competitive with the rest of the world.
The US reached agreements with Costa Rica and Panama to make them part of the chip supply chain. Will this strategy be expanded to the rest of Latin America?
Latin America continues to be one of our most important allies. Our most important commercial partners are in Latin America. By the way, my Agency (EDA) has a very successful program called "Americas Competitiveness Exchange" (ACE). And we are going to be in Paname in February. We bring collaborators from all over the hemisphere to talk about those opportunities we have for technology, innovation and development. We were in Ecuator last year, and it has been a very successful program because Latin America is one of our most appreciated partners.
Will the government make an exception for Argentina, so that lithium exports are included in the Inflation Reduction Act, despite not having a free trade agreement with the US?
I can't particularly speak to this, but I will tell you that in the Department of Commerce we have the International Trade Administration, which is currently addressing this issue.
With the data from November, annualized inflation fell to 3.1%. Will the trend continue downwards?
We are paying a lot of attention to inflation. And you've seen how President Biden set guidelines in that area, lowering gasoline and drug prices. We are seeing that the prices of eggs and other important consumption items for the daily basket of goods are falling. The administration is looking to make sure that the decline in inflation continues and we're also seeing that unemployment is still pretty low so, going back to the point of increasing pay, increasing wages and lowering inflation, it's all part of the "Investing in America" program that President Biden is carrying out.
As the daughter of Dominicans who moved to the Bronx, what do you think of the discussions that are taking place in Congress and the campaign regarding toughening immigration policies and controls at the Southern border?
The Biden administration continues to support our allies in Latin America and collaborate on finding solutions. I will tell you that this is a country of immigrants. We have always been. Immigrants come with an extraordinary desire. So, as an administration, we are committed to seeking solutions that are humanitarian, that have legitimacy, dignity, and that also recognize the enormous contribution that our Latin American immigrants provide. On a personal level, I always emphasize the enormous contribution that immigrants continue to make, from my parents and my ancestors, so thank you for the question.
Translator: Bibiana Ruiz.
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