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U.S. auto industry to press Congress again on chips shortage

WASHINGTON, April 27 (Reuters) - Major automakers and suppliers will press Congress again on Tuesday to address the global shortage of semiconductor chips that has curtailed auto production around the world.

A U.S. Senate subcommittee will hear testimony from auto industry groups urging action to address production of “mature node” chips.

The industry backs proposals to spend tens of billions of dollars to boost U.S. semiconductor production and new tax incentives to help chip companies offset costs of creating new lines within existing facilities.

“There is an undeniable need to expand semiconductor capacity in the U.S. to meet the growing demand within the auto industry, as well as other sectors across the economy,” John Bozzella, the head of the Alliance for Automotive Innovation, will tell the panel in testimony seen by Reuters.

Bozzella wrote in an April 19 letter to U.S. congressional leaders that some of the new funding should be used to build new chip capacity that “will support the auto industry, as well as other sectors that rely on mature nodes – including defense, medical, and critical infrastructure.”

Ann Wilson, senior vice president at the Motor & Equipment Manufacturers Association, will tell the Senate panel auto suppliers are facing “a significant supply chain crisis”.

Automakers have warned the shortage could result in 1.3 million fewer vehicles built this year in the United States and disrupt some production for at least another six months.

Last week, both Ford Motor and Stellantis announced additional chip-related production cuts, while Volkswagen announced production cuts in Mexico on Monday.

President Joe Biden’s proposed $2 trillion infrastructure investment package includes $50 billion for semiconductor production and research. It also includes another $50 billion to create a new office at the Commerce Department to monitor domestic industrial capacity and fund investments in the production of critical goods.

Reporting by David Shepardson; Editing by Edwina Gibbs

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