Biden signs order increasing reviews of foreign investment in tech
US President Joe Biden underlines the importance of being more thorough in terms of inspections of the parties that are to make investments in the US tech industry.
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U.S. President Joe Biden signs an executive order as Vice President Kamala Harris, Health and Human Services Secretary Xavier Becerra, and Deputy Attorney General Lisa Monaco stand at his side at the White House in Washington, US, July 8, 2022 (Reuters)
US President Joe Biden signed Thursday an executive order to carry out more thorough inspections of foreign investment in technology, particularly in semiconductors and supply chains.
The Biden administration has long acknowledged the fact that certain investments made by foreign individuals or parties, especially from competitors, could present a high risk to national security.
"Some countries use foreign investment to obtain access to sensitive data and technologies for purposes that are detrimental to US national security," a White House statement read.
"As the national security environment, including the behavior of countries and individuals that seek to impair US national security, evolves, the review process of the Committee on Foreign Investment in the United States (CFIUS, or the Committee) also must evolve," the statement read further.
Biden's executive order links the CFIUS' role, actions, and capabilities to the Biden administration's priorities in terms of national security. The priorities in question include preserving America's leading role in the tech industry, protecting sensitive data of US citizens, and bolstering the resilience of the domestic supply chain, the White House underlined.
The executive order did not specify Beijing, but it did come around a month after Biden signed legislation bolstering US semiconductor manufacturing to try subverting China.
The bipartisan CHIPS and Science Act allots $52.7 billion to boost domestic scientific research, enhance the US economy and national security, solve supply chain vulnerabilities by increasing domestic production, and expand the manufacture of chips in the US.
Republicans, as well as Democrats, joined Biden on the White House lawn as the US President signed the chips bill that was distilled years in Congress before getting approval.
The White House's bill passage was creating new chip investments: Qualcomm agreed to buy $4.2 billion in semiconductor chips from GlobalFoundries' factory in New York, which totals $7.4 billion in purchases through 2028.
The bill, furthermore, includes a 25% investment tax credit for chip plants, worth around $24 billion.
Microchip shortage causes $240 billion loss for US economy in 2021
According to analysts earlier this year, a shortage of microchips in manufacturing processes in the US cost the US economy $240 billion last year, with electronics companies bearing the brunt of the impact.
According to CBS, disruptions were caused by the closure of key chip production sites in Asia owing to the epidemic.
The CEO of the Optimal Design company, Sajid Patel, told CBS that in some instances, production had to be scaled back because chips were unavailable, adding that "I think it's important for us to make this product in the United States. We're not making enough of it now. We have to make more of it. And the only way that you do that is to have more plants. And so this is the investment, frankly, in the future. It's not that far off."
The microchip scarcity has also hampered automobile production. Instead of driving immediately to the showroom, Ford vehicles were transported to parking lots from the assembly line where they waited for chips.
As a result, Ford lost $210 billion. The scarcity is predicted to worsen in the near future, but domestic chip manufacturing is expected to increase, with Intel announcing the development of a chip facility in the state of Ohio.
