AI boom tests GOP's midterm affordability pitch as price pain spreads

"When you have a big race like we have with AI, there are secondary effects that we need to be very concerned about," former Rep. Patrick McHenry, who served as House Financial Services Committee chairman, told Fox News Digital, adding, "It is hurting Republicans."

"We see this from our handheld devices to our computers, to TVs," McHenry, a North Carolina Republican congressman turned policy advisor, said in an interview. "Even autos are impacted, and even things such as what we think of as average everyday things that aren't particularly high-tech, like the things we use to manicure our lawns are impacted by rising prices of chips, so there's a lot of secondary effects across consumer goods and should be a huge concern."

Historically, the party in control loses seats during the midterms. One Republican strategist told Fox News Digital that AI's well-documented dominance over the chip market should be viewed as hurting voters' pocketbooks. The strategist called on the three largest chip manufacturing companies to expand production, which he said would help bolster the GOP's campaign message.

"America must win the artificial intelligence race. Companies like Samsung, SK Hynix and Micron understand that," the strategist said. "At the same time, we can't forget about consumer goods. Memory chip manufacturers need to increase production to boost both American AI and lower the cost of consumer goods. If they don't, it will undoubtedly hurt Republicans politically in the midterms. How can Republicans campaign on 'lower costs' in 2024, but see computer and car prices rise in 2026 due to a lack of chip production?"

The AI boom is increasing demand for memory chips, which are semiconductor components used in data centers, laptops and smartphones.

Asked about the AI-driven affordability concerns, White House spokesman Kush Desai told Fox News Digital in a statement that the White House was cognizant of the clash and balancing it with a "nuanced" economic plan, which includes Trump's signature worldwide tariffs, which the president restructured after the Supreme Court struck down his initial plan implementing them in the name of what he said was a global economic emergency.

"The fact that semiconductor chips are absolutely critical for everything from cutting-edge AI technology to everyday consumer goods only reinforces the importance of President Trump's push to reinvigorate America's semiconductor industry," Desai said. "Hundreds of billions in semiconductor manufacturing investments reflect how the private sector is enthusiastically responding to the Administration's nuanced and multi-faceted agenda of tariffs, deregulation and tax cuts."

The strain on supply is also raising new questions about the effectiveness of the bipartisan CHIPS Act, a Biden administration bill designed to boost domestic production and prevent precisely the kind of shortage markets are now seeing.

McHenry, who specializes in fintech policy, said the CHIPS Act, a multibillion-dollar effort to pour federal subsidies and tax incentives into U.S. chip manufacturing, has been a "grave disappointment." McHenry said both that the White House had "a lot more work" to do to address the supply shortage and that congressional reforms were another way to improve domestic chip production.

"Unfortunately for the taxpayer, they paid for the CHIPS Act the first time, and now they're paying for it a second time with the rising price of consumer goods," McHenry said. "Republicans need to address this on Capitol Hill. They need to clean up the CHIPS Act, so the president can deploy these tools to incentivize and grow chip manufacturing here in the United States."

Rep. Darrell Issa, R-Calif., who founded a successful car security company, said he sees a need for chip production expansion, tying it to consumer costs, in a statement to Fox News Digital.

"America leads the world in AI - and we stay there by unleashing the nation's industrial base, ramping up chip production and memory as never before and lowering the consumer costs people pay every day," he said.

The congressman said more chips were "essential" to delivering on the GOP's promises of "opportunity, prosperity and affordability."

Fox News Digital reached out to representatives of Samsung, SK Hynix and Micron for comment.