According to Sen. John Cornyn, the pandemic laid bare vulnerabilities in supply chains that need to be addressed, even if the best option is not the least expensive.
AUSTIN, Texas — Nearly a month after Samsung announced it will expand operations into Taylor, Sen. John Cornyn (R-Texas) sat down with KVUE’s Mike Marut to talk about what the move could mean for the tech future of the United States.
KVUE: What’s your immediate takeaway from this announcement?
Sen. John Cornyn: Well, it’s good news, obviously, for Texas and the region, obviously a lot of good, well-paying jobs are going to be coming along with this new semiconductor foundry or fab, as they’re called. But it’s also shoring up a vulnerability that COVID-19 has exposed. We know that a lot of the manufactured goods that we buy and use in America are made overseas because the cost of making it is lower. And in fact, manufacturing, for example, advanced semiconductors, are about 30% cheaper in Asia, which is why 90% of the semiconductors in the world are made there. But obviously, that’s a vulnerability. Can you imagine if we had another pandemic, heaven forbid, or a natural disaster? Or, let’s say, the People’s Republic of China, President Xi decided to attack and occupy Taiwan. Taiwan alone makes 63% of the most advanced semiconductors in the world. And as a matter of fact, I was just over there a few weeks ago visiting Taiwan Semiconductor Manufacturing Company. So the point is, we need the manufacturers of some of these critical components for everything from our iPhone to our fifth generation joint strike fighter here in America. And that’s why I think this is such good news from an economic standpoint, from a job creation standpoint, but also eliminating or reducing the risk we have from these these supply chains from overseas.
KVUE: You mentioned this in the very beginning, but obviously the vulnerability of supply chains, and just the variety of of the goods, are being interrupted as well. Can you speak more to the variety of manufacturers that we need?
Cornyn: Well, we were also working to identify other supply chain vulnerabilities. I’m working with one of my colleagues, Democrat from Pennsylvania, Senator Bob Casey, on outbound investments made in critical areas that we depend on. I just think we need, we need to continue to fill out the picture and to identify where those vulnerabilities exist. Again, I think we’ve sort of lapsed into this complacency, this idea that just because it can be made cheaper someplace else that that answers all the checks, all the boxes and answers, all the questions. But we know that we are in a competition with China in particular, but the good news is we have one thing that China does not have, which is friends and allies, and that’s why we’re working in the region to address some of our national security concerns, as well as diversify our supply chains. But we’re seeing huge investments being made now by companies like Samsung Taiwan Semiconductor Companies building a fab in Arizona. Intel has said they plan to invest as much as $100 billion in semiconductor manufacturing and Micron, another major semiconductor manufacturer. But what’s made this so unique is that Taiwan Semiconductor basically makes semiconductors for other companies. Other companies design them, but they contract with Taiwan Semiconductor to actually make them. And that’s a cost effective way of addressing the manufacturing process for them. But again, having all of these on a little island, which is being threatened by the People’s Republic of China, makes me very nervous and very concerned. And sort of eliminating that vulnerability is important, but it’s certainly not the only one.
KVUE: Do you think this opens the door for not just more manufacturing of semiconductors, like you said, Intel, Micron and a few others, but really just more companies in general to look at the United States, look at Texas specifically as well and move some sort of operations here?
Cornyn: Yeah, I do, and as you know that all of these companies are being competed for by other states, by various incentives that local government and state government and are providing. What this legislation that we have pending here in the House of Representatives that we hope to get passed by February. Rep. Michael McCaul, my colleague and friend from the Austin area, is leading that effort in the house. But this provides an additional federal incentive to try to fill that gap between manufacturing overseas, which is 30% cheaper than it would be to make it manufacture in the United States. I think that’s a critical investment for us to make, not only to compete more favorably with China, but to eliminate again this vulnerability. And in the meantime, attract new businesses and new jobs to Texas.
KVUE: And the mindset that cheaper isn’t necessarily always better, like you were mentioning before, do you think that’s going to kind of bleed over into other legislation for you?
Cornyn: Yeah, I think our competition with China and what we’ve learned in terms of the vulnerability of our supply chains as a result of COVID has really forced all of us to think a little bit differently. I’m not suggesting that the federal government goes in the business of making things like semiconductors. But I think there are categories of products that are absolutely essential to our modern way of life. We’ve seen these semiconductors get smaller and more powerful over time, and they’re really, really difficult to make. And that’s why you have one company in the Taiwan Semiconductor Company, the leading manufacturer in the world, and indeed the sole source for many of these most advanced semiconductors. But we all know that our lives are being more, more and more and more impacted by electronics, and all of these things require semiconductors, even our cars. We’ve seen a shortage of semiconductors and a delay in manufacturing automobiles because they also depend on semiconductors being basically computers on wheels now. But it’s also our refrigerators, our washing machines. Just about everything involves micro circuits, these semiconductors. And so that’s why this has risen to the top of our concerns and why I’m so excited not only about what Samsung is doing in central Texas, but also about the prospect of other semiconductor manufacturing occurring in the United States.
KVUE: And one last question about the Chips Act. The Senate approved the funding for it back in the summer, June, July. It’s been in the House since then, and when I talked to Representative McCaul, he was very excited, especially back then. He was very excited about hopefully how quickly this could get approved by the House. Where is your mindset at with that? Because it’s been five, six months since that time.
Cornyn: As you know, nothing happens as fast as you would like here in Congress. And I think because of some of the focus of the administration on things like their infrastructure bill and the so-called Build Back Better bill, they haven’t done some of the… they haven’t picked up and addressed some of these other pieces of legislation, which do enjoy broad bipartisan support like the CHIPS Act. So I expect that by February, mid-February, when the current spending bill expires, there will be another one for the rest of the year and this will be part of that. I think Senator Chuck Schumer (D-New York), again, this is something that’s bipartisan, bicameral and that the administration understands and wants. So one of my biggest frustrations here is when Republicans want it, Democrats want it, the White House wants it, the Senate wants it, the House wants it. And yet we still can’t quite get it done. But we will. We will, and I think February is the most likely timeframe.
KVUE: All right. That’s all my questions. Anything else that you want to add about Samsung Manufacturing, semiconductors, Chips Act?
Cornyn: I think I think you’ve covered it. I appreciate it.
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