Investing.com – The risk of a recession in the U.S. and around the world worries investors as central banks are forced to tighten their monetary policies sharply to combat rising inflation.
But in addition to this background, other specific factors also threaten the US economy, and one of them was said to be a key risk by US Commerce Secretary Gina Raimondo during a speech on CNBC last Wednesday.
He argued that the US is at risk of a “deep and immediate” recession if its current reliance on foreign chip manufacturing ceases.
“If you allow yourself to think about a scenario where the U.S. no longer has access to chips made in Taiwan right now, that’s a scary scenario,” Raimondo said. “It’s a deep and immediate recession. The inability to protect ourselves by making military equipment. We need to do this in America. We need a manufacturing base to produce these chips, at least in sufficient quantities, here on our shores, otherwise we’ll be dependent on other countries.”
It’s important to note that these comments come as Congress prepares to vote on the CHIPS Act, a more than $50 billion funding bill aimed at funding semiconductor manufacturing in the United States.
Mrs. Raimondo responded to criticism of this significant funding, explaining that semiconductors are “the foundational technology needed to support all other innovation-based industries.”
He said 90% of high-end chips purchased from Taiwan, adding that the country’s heavy reliance on foreign chip manufacturing poses a national security risk.
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