By David Shepardson

WASHINGTON (Reuters] – The White House met with U.S. politicians Wednesday to discuss the serious risks that the American economy faces from supply chain issues in semiconductors. This was as Congress pushes for $52B to subsidize American production.

Brian Deese from the White House National Economic Council stated that reporters were given “the best estimations” of how the absence of available semiconductors would have a significant impact on GDP growth in 2021.

It included Gina Raimondo Commerce Secretary, Kathleen Hicks Deputy Defense Secretary, and Jake Sullivan National Security Advisor to “discuss” the urgency to invest in Made-in-America Semiconductors as well as research-and-development that will safeguard our national security, the White House reported.

An industry-wide shortage in chips has caused disruptions to production, causing some companies to reduce production. There has been a growing demand to reduce dependence on foreign countries for semiconductors.

“A significant interruption to our supply of semiconductors could cause historic damage to the U.S. economy – damage far greater than the impact of chips shortages on the American auto industry right now – and would undercut our technological competitiveness and military advantages over adversaries globally,” the White House said.

After months of negotiations, the White House is pushing Congress to authorize U.S. subsidy for manufacturing semiconductor chips.

The Senate approved $52 billion for chips funding, and $190 billion was authorized to boost U.S. technology. This bill was passed by the House of Representatives in February. Deese expressed hope that both the Senate as well as House will “quickly begin” a formal process for settling a compromise bill.

Deese stated that “the risks are deep” and outlined the consequences for America’s economy in case of severe disruption. Deese mentioned “economic movements by key competitors, most notably China about the escalating vulnerability we have from this semiconductor issue.”

A Commerce Department analysis was provided to Reuters for this briefing. It noted that semiconductor fabs can take many years to build.

According to the report, “There’s no fast fix for an emergency”, and adding private sector investment into U.S. chips production “will not suffice” to address the supply chain vulnerability risks.

These bills offer different ways to address U.S. competition with China on many issues as well as trade provisions and climate.

Biden Administration notes that while the United States produced 40% of all chips by 1990, it produces only 12% globally today.