International
“Real Geopolitical Risks”: K Street Sets Sights On New Semiconductor Policy Amid Global Shortage
"Real Geopolitical Risks": K Street Sets Sights On New Semiconductor Policy Amid Global Shortage
Authored by Alyce McFadden via OpenSecrets.org,
A sweeping bill to encourage companies to manufacture semiconductors in the US passed the…
Authored by Alyce McFadden via OpenSecrets.org,
A sweeping bill to encourage companies to manufacture semiconductors in the US passed the Senate on June 8 with bipartisan support. The tiny computer chips are used in practically all modern technology and the current global supply chain shortage of these semiconductors could spell disaster for American manufacturing.
Demand for semiconductors spiked 6.5% in 2020 as tech companies raced to produce products aimed at facilitating remote learning, work and healthcare during the coronavirus pandemic. Industry experts have warned that further disruptions of the global supply chain could have dramatic consequences in the U.S. such as limiting American companies’ ability to produce everything from iPhones to high-tech weaponry and even medical equipment. On Monday, NPR reported the global shortage forced an Alabama Hyundai plant to pause production.
The United States Innovation and Competition Act of 2021 would allocate $92 billion to subsidize domestic production of semiconductors, and $195 billion in subsidies for technological research and development. And American businesses and research groups are lobbying hard to direct that money to their organizations.
Senate Majority Leader Chuck Schumer (D-N.Y.) is the original sponsor of the measure and seven Republican senators signed on as co-sponsors, making the bill a rare glimmer of bipartisanship in the highly-polarized Congress. The legislation combines two pre-existing bills: one aimed at bolstering scientific and technological research, and the other designed to encourage domestic semiconductor manufacturing. The bill was introduced in the House in February but hasn’t received a floor vote.
Top lobbying groups like the US Chamber of Commerce, the Alliance for Automotive Innovation and the National Association of Manufacturers support the legislation. Earlier this year, these groups released statements urging Congress to provide economic incentives for increased domestic production of semiconductors.
Only 12% of the world’s semiconductors are produced in the US. That’s a decrease of approximately 25% from the U.S.’s share of global production in 1990, according to a 2020 report by the Semiconductor Industry Association, the sector’s largest trade group.
During a Wednesday webinar on semiconductor policy, SIA President John Neuffer said potential supply chain issues could cause "real geopolitical risks" for the US if the government doesn’t create economic incentives for domestic manufacturers. "We have some blind spots that need to be addressed. The great thing is the U.S. government is focused like a laser on helping facilitate good outcomes," Neuffer said.
Neuffer added that the biggest barrier to U.S. manufacturing is a lack of federal investment. "By far the biggest barriers to manufacturing in the U.S. are incentives offered overseas. What happened is that competing countries took the decision to incentivize manufacturing in their countries, massive incentives," Neuffer said. "We absolutely need to have our government step in and offer similar incentives."
The semiconductor shortage that has dominated headlines can be traced to a massive increase in demand across areas from consumer electronics to cloud computing. Most notably, the automotive industry completely missed the boat on predicting how quickly demand would rebound. ???????? pic.twitter.com/ecupujeNTp
— Atlantic Council GeoEconomics Center (@ACGeoEcon) June 17, 2021
There are 21 lobbyists registered for the SIA in 2021, and the trade association spent $300,000 on lobbying expenses in the first financial quarter. In 2020, the group spent a total of $1.2 million to lobby the federal government.
While disclosures for the second financial quarter aren’t available yet, lobbyists working on behalf of 64 separate clients reported lobbying activity related to the Endless Frontier Act, a 2020 bill to boost scientific research and development of technology like semiconductors. Defense contractors, software companies, hospitals, trade associations and research universities were among the diverse group of clients who lobbied on the bill.
Lobbyists for Microsoft filed six individual lobbying reports that mentioned the Endless Frontier Act by name. Booz Allen Hamilton, an information consulting company that works closely with the US military, reported $210,000 in lobbying expenses on the the Endless Frontier Act in one lobbying report alone.
"Washington is increasingly focused on issues impacting the semiconductor sector, so our industry has bulked up its presence to ensure policymakers understand that US leadership in semiconductors is essential to America’s global technology leadership, national security, economic strength and job creation," Neuffer told The Hill last summer.
According to CNBC, Taiwanese factories that produce semiconductors — called foundries — made up 63% of the global revenue from sales of semiconductors. In 2020, the Taiwan External Trade Development Council spent $1.8 million to lobby the US government.
Although the Senate-passed bill aims to boost domestic production, foreign-owned manufacturers could benefit from federal subsidies if they elect to build foundries in the US. The Wall Street Journal reported in 2020 that the leading Taiwanese production company planned to spend $12 billion over nearly a decade to build a new foundry in Arizona.
Some experts warn a Chinese initiative to dramatically increase the country’s semiconductor manufacturing capacity could threaten U.S. national security interests. In 2014, Chinese hackers breached computer hardware company Intel Corp.'s internal network by hacking into one microchip producer’s software, according to a Bloomberg investigation. One former FBI official told Bloomberg the hack demonstrated "an example of the worst-case scenario if you don’t have complete supervision over where your devices are manufactured."
Chinese manufacturers controlled about 6% of the market share of semiconductor production in 2020.
"There’s a big part of the performance of the actual chip that is tied to the manufacturing process," Favre said. "The fact that these latest generations of technologies are 100% off shore, that does create a vulnerability." During his first two months in office, President Joe Biden issued an executive order directing the Department of Commerce to identify "risks in the semiconductor manufacturing and advanced packaging supply chains and policy recommendations to address these risks."
Biden reiterated his commitment to bolstering domestic manufacturing in a news conference at the G7 summit Sunday, emphasizing the importance of keeping pace with China’s technological output.
"We’re in a contest, not with China per se," Biden said, but "with autocrats, autocratic governments around the world, as to whether or not democracies can compete with them in a rapidly changing 21st century."
Spread & Containment
You can now enter this country without a passport
Singapore has been on a larger push to speed up the flow of tourists with digital immigration clearance.
In the fall of 2023, the city-state of Singapore announced that it was working on end-to-end biometrics that would allow travelers passing through its Changi Airport to check into flights, drop off bags and even leave and exit the country without a passport.
The latter is the most technologically advanced step of them all because not all countries issue passports with the same biometrics while immigration laws leave fewer room for mistakes about who enters the country.
Related: A country just went visa-free for visitors with any passport
That said, Singapore is one step closer to instituting passport-free travel by testing it at its land border with Malaysia. The two countries have two border checkpoints, Woodlands and Tuas, and as of March 20 those entering in Singapore by car are able to show a QR code that they generate through the government’s MyICA app instead of the passport.
Here is who is now able to enter Singapore passport-free
The latter will be available to citizens of Singapore, permanent residents and tourists who have already entered the country once with their current passport. The government app pulls data from one's passport and shows the border officer the conditions of one's entry clearance already recorded in the system.
More Travel:
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- Airlines see a new kind of traveler at the front of the plane
While not truly passport-free since tourists still need to link a valid passport to an online system, the move is the first step in Singapore's larger push to get rid of physical passports.
"The QR code initiative allows travellers to enjoy a faster and more convenient experience, with estimated time savings of around 20 seconds for cars with four travellers, to approximately one minute for cars with 10 travellers," Singapore's Immigration and Checkpoints Authority wrote in a press release announcing the new feature. "Overall waiting time can be reduced by more than 30% if most car travellers use QR code for clearance."
More countries are looking at passport-free travel but it will take years to implement
The land crossings between Singapore and Malaysia can get very busy — government numbers show that a new post-pandemic record of 495,000 people crossed Woodlands and Tuas on the weekend of March 8 (the day before Singapore's holiday weekend.)
Even once Singapore implements fully digital clearance at all of its crossings, the change will in no way affect immigration rules since it's only a way of transferring the status afforded by one's nationality into a digital system (those who need a visa to enter Singapore will still need to apply for one at a consulate before the trip.) More countries are in the process of moving toward similar systems but due to the varying availability of necessary technology and the types of passports issued by different countries, the prospect of agent-free crossings is still many years away.
In the U.S., Chicago's O'Hare International Airport was chosen to take part in a pilot program in which low-risk travelers with TSA PreCheck can check into their flight and pass security on domestic flights without showing ID. The UK has also been testing similar digital crossings for British and EU citizens but no similar push for international travelers is currently being planned in the U.S.
stocks pandemic link testing singapore uk euInternational
This country became first in the world to let in tourists passport-free
Singapore has been on a larger push to speed up the flow of tourists with digital immigration clearance.
In the fall of 2023, the city-state of Singapore announced that it was working on end-to-end biometrics that would allow travelers passing through its Changi Airport to check into flights, drop off bags and even leave and exit the country without a passport.
The latter is the most technologically advanced step of them all because not all countries issue passports with the same biometrics while immigration laws leave fewer room for mistakes about who enters the country.
Related: A country just went visa-free for visitors with any passport
That said, Singapore is one step closer to instituting passport-free travel by testing it at its land border with Malaysia. The two countries have two border checkpoints, Woodlands and Tuas, and as of March 20 those entering in Singapore by car are able to show a QR code that they generate through the government’s MyICA app instead of the passport.
Here is who is now able to enter Singapore passport-free
The latter will be available to citizens of Singapore, permanent residents and tourists who have already entered the country once with their current passport. The government app pulls data from one's passport and shows the border officer the conditions of one's entry clearance already recorded in the system.
More Travel:
- A new travel term is taking over the internet (and reaching airlines and hotels)
- The 10 best airline stocks to buy now
- Airlines see a new kind of traveler at the front of the plane
While not truly passport-free since tourists still need to link a valid passport to an online system, the move is the first step in Singapore's larger push to get rid of physical passports.
"The QR code initiative allows travellers to enjoy a faster and more convenient experience, with estimated time savings of around 20 seconds for cars with four travellers, to approximately one minute for cars with 10 travellers," Singapore's Immigration and Checkpoints Authority wrote in a press release announcing the new feature. "Overall waiting time can be reduced by more than 30% if most car travellers use QR code for clearance."
More countries are looking at passport-free travel but it will take years to implement
The land crossings between Singapore and Malaysia can get very busy — government numbers show that a new post-pandemic record of 495,000 people crossed Woodlands and Tuas on the weekend of March 8 (the day before Singapore's holiday weekend.)
Even once Singapore implements fully digital clearance at all of its crossings, the change will in no way affect immigration rules since it's only a way of transferring the status afforded by one's nationality into a digital system (those who need a visa to enter Singapore will still need to apply for one at a consulate before the trip.) More countries are in the process of moving toward similar systems but due to the varying availability of necessary technology and the types of passports issued by different countries, the prospect of agent-free crossings is still many years away.
In the U.S., Chicago's O'Hare International Airport was chosen to take part in a pilot program in which low-risk travelers with TSA PreCheck can check into their flight and pass security on domestic flights without showing ID. The UK has also been testing similar digital crossings for British and EU citizens but no similar push for international travelers is currently being planned in the U.S.
stocks pandemic link testing singapore uk euGovernment
Analysts issue unexpected crude oil price forecast after surge
Here’s what a key investment firm says about the commodity.
Oil is an asset defined by volatility.
U.S. crude prices stood above $60 a barrel in January 2020, just as the covid pandemic began. Three months later, prices briefly went negative, as the pandemic crushed demand.
By June 2022 the price rebounded all the way to $120, as fiscal and monetary stimulus boosted the economy. The price fell back to $80 in September 2022. Since then, it has bounced between about $65 and $90.
Over the past two months, the price has climbed 15% to $82 as of March 20.
Bullish factors for oil prices
The move stems partly from indications that economic growth this year will be stronger than analysts expected.
Related: The Fed rate decision won't surprise markets. What happens next might
Vanguard has just raised its estimate for 2024 U.S. GDP growth to 2% from 0.5%.
Meanwhile, China’s factory output and retail sales exceeded forecasts in January and February. That could boost oil demand in the country, the world's No. 1 oil importer.
Also, drone strokes from Ukraine have knocked out some of Russia’s oil refinery capacity. Ukraine has hit at least nine major refineries this year, erasing an estimated 11% of Russia’s production capacity, according to Bloomberg.
“Russia is a gas station with an army, and we intend on destroying that gas station,” Francisco Serra-Martins, chief executive of drone manufacturer Terminal Autonomy, told the news service. Gasoline, of course, is one of the products made at refineries.
Speaking of gas, the recent surge of oil prices has sent it higher as well. The average national price for regular gas totaled $3.52 per gallon Wednesday, up 7% from a month ago, according to the American Automobile Association. And we’re nearing the peak driving season.
Another bullish factor for oil: Iraq said Monday that it’s cutting oil exports by 130,000 barrels per day in coming months. Iraq produced much more oil in January and February than its OPEC (Organization of Petroleum Exporting Countries) target.
Citigroup’s oil-price forecast
Yet, not everyone is bullish on oil going forward. Citigroup analysts see prices falling through next year, Dow Jones’s Oil Price Information Service (OPIS) reports.
More Economic Analysis:
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- February inflation surprises with modest uptick, but core pressures ease
- Vanguard unveils bold interest rate forecast ahead of Fed meeting
The analysts note that supply is at risk in Israel, Iran, Iraq, Libya, and Venezuela. But Saudi Arabia, the UAE, Kuwait, and Russia could easily make up any shortfall.
Moreover, output should also rise this year and next in the U.S., Canada, Brazil, and Guyana, the analysts said. Meanwhile, global demand growth will decelerate, amid increased electric vehicle use and economic weakness.
Regarding refineries, the analysts see strong gains in capacity and capacity upgrades this year.
What if Donald Trump is elected president again? That “would likely be bearish for oil and gas," as Trump's policies could boost trade tension, crimping demand, they said.
The analysts made predictions for European oil prices, the world’s benchmark, which sat Wednesday at $86.
They forecast a 9% slide in the second quarter to $78, then a decline to $74 in the third quarter and $70 in the fourth quarter.
Next year should see a descent to $65 in the first quarter, $60 in the second and third, and finally $55 in the fourth, Citi said. That would leave the price 36% below current levels.
U.S. crude prices will trade $4 below European prices from the second quarter this year until the end of 2025, the analysts maintain.
Related: Veteran fund manager picks favorite stocks for 2024
stimulus economic growth pandemic dow jones stocks fed army trump gdp stimulus oil iran brazil canada european russia ukraine china-
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