The share of modern semiconductor manufacturing capacity located in the U.S. has eroded from 37% in 1990 to 12% today, mostly because other countries’ governments have invested ambitiously in chip manufacturing incentives and the U.S. government has not. Meanwhile, federal investments in chip research have held flat as a share of GDP, while other countries have significantly ramped up research investments.
By enacting the CHIPS for America Act in the FY 2021 National Defense Authorization Act (NDAA), Congress recognized the critical role the U.S. semiconductor industry plays in America’s future. Now, the administration and Congress must fully fund the semiconductor manufacturing and research provisions authorized by the CHIPS Act — and enact an investment tax credit — to strengthen America’s global leadership in chip technology for years to come.
The U.S. Senate on June 8, 2021 took a significant step toward this goal by passing broad competitiveness legislation called the U.S. Innovation and Competition Act (USICA) (S.1260), which includes $52 billion in federal investments for the domestic semiconductor research, design, and manufacturing provisions in the CHIPS Act. The House of Representatives followed suit, passing competitiveness legislation called the America COMPETES Act, which also includes $52 billion in CHIPS Act investments, on Feb. 4, 2022. Now the House and Senate must reach agreement on joint competitiveness legislation containing CHIPS Act investments that can be passed by both chambers and signed into law by President Biden.
Congress is also considering legislation called the FABS Act that would establish a semiconductor investment tax credit. The FABS Act should include expenditures for both manufacturing and design to help strengthen the entire semiconductor ecosystem.
By funding the CHIPS Act and expanding and enacting the FABS Act, leaders in Washington can usher in a historic resurgence of chip manufacturing in America, strengthen our country’s most critical industries, boost domestic chip research and design, and help ensure the U.S. leads in the crucial, chip-enabled technologies that will define America’s strength for decades to come.
“House passage of CHIPS Act investments is a significant step toward strengthening America’s leadership in semiconductors, which are foundational to our economy, national security, and global leadership in the transformative technologies of now and the future,” said John Neuffer, SIA president and CEO. “We urge leaders in the House and Senate to work together promptly on a bipartisan, bicameral competitiveness bill containing CHIPS Act investments that can be passed by both chambers and signed into law by the president. Getting this legislation across the finish line will help strengthen U.S. chip production and innovation for many years to come.”
The semiconductor industry directly employs nearly 250,000 people in America and supports more than one million additional jobs throughout the U.S. economy. With bold greater federal investment in domestic chip manufacturing and research, our economic impact would be even greater.