Industry Leaders Urge Congress to Boost Chip Policy to Win AI Race Against China

Why It Matters

Without decisive policy action, the United States risks losing its semiconductor edge, undermining AI leadership and national security. Strengthening the chip ecosystem is essential to protect supply chains and sustain economic growth.

Key Takeaways

• AI drives over half of semiconductor revenue, projected $1T by 2030
• 70% of chips are produced abroad, highlighting supply chain vulnerability
• Expiring advanced manufacturing tax credit threatens U.S. chip investment
• Industry calls for streamlined permitting and tariff exemptions for equipment
• CHIPS Act funding cuts risk losing momentum against China’s AI push

Pulse Analysis

The artificial‑intelligence boom has turned semiconductors into the linchpin of modern technology, from smartphones to data‑center accelerators. While U.S. firms dominate design, roughly 70% of chip fabrication occurs overseas, exposing the supply chain to geopolitical shocks and price volatility. This dependency becomes acute as AI workloads drive more than half of semiconductor sales, a trend projected to push the market to $1 trillion by 2030. The strategic imperative is clear: the United States must secure a domestic manufacturing base that can meet the speed and scale demanded by next‑generation AI workloads.

Policy makers are wrestling with a patchwork of incentives and regulatory hurdles. The 2022 CHIPS and Science Act allocated over $50 billion for U.S. fab construction, but recent funding cuts and staff reductions have stalled progress. Industry leaders warned that the advanced manufacturing tax credit, set to expire at year‑end, could deter new investments just as global rivals accelerate capacity expansions. They also urged Congress to modernize permitting processes for factories and data centers and to create tariff exemptions for specialized equipment that the U.S. does not yet produce, thereby leveling the playing field without compromising safety or environmental standards.

The stakes extend beyond economics to national security and global influence. A weakened domestic chip ecosystem could cede critical AI infrastructure to China, reshaping the technology stack that underpins everything from defense systems to cloud services. By restoring robust funding for the CHIPS program, extending tax incentives, and streamlining regulatory pathways, the United States can reinforce its leadership, attract private capital, and ensure that future AI breakthroughs are built on an American foundation. Failure to act risks an existential competitive gap that could persist for decades.