by Jennifer Meng, Director of Global Policy
The strategic significance of semiconductors and their ever-increasing importance for economic competitiveness and supply-chain resilience has become a focus for governments worldwide. The widespread global chip shortage as a result of the COVID-19 crisis in late 2020 has shown that vulnerabilities in the global semiconductor supply chain put at risk many technologies and products essential to our daily lives. Indeed, the United States is now vulnerable to supply-chain disruptions as it has fallen behind global competition in providing support for this strategic sector.
Other governments have long understood the strategic importance of semiconductors and sought to provide fiscal support for their sectors. A recent study found that the global nature of the semiconductor supply chain is one of the key reasons for this industry’s success, and semiconductor self-sufficiency is nearly impossible to achieve for any one company or country. Accelerating geopolitical tensions, however, have further underscored the urgency for some governments to rebalance and strengthen their position within the global chip supply chain. The United States, too, has put forward a bold, $52 billion plan to revitalize its chip manufacturing and research. The provisions of this plan were authorized by the CHIPS for America Act, which was enacted earlier this year, but funding must now be provided to make these initiatives a reality. Otherwise, America risks falling behind.
In fact, multiple governments across the world have been reassessing their positions across the semiconductor value chain and looking to act, rolling out new national industrial policies and significant investments for semiconductor manufacturing and R&D within their borders. In the past several years, China, Korea, and the EU – all major players in the semiconductor industry – have announced the potential for up to $250 billion in government investments over the next decade dedicated to the semiconductor industry.
With countries around the world investing hundreds of billions of dollars to promote the competitiveness of their semiconductor industries and bolster domestic chip manufacturing, funding the incentives called for in the CHIPS Act is even more pressing to maintain U.S. leadership in semiconductors. In addition to bolstering U.S. competitiveness, it is essential the U.S. government increase dialogue and communication with key global partners on supply chain issues. Recent announcements that the U.S. will set up semiconductor dialogues with Japan and South Korea are welcome steps in that direction.
The semiconductor industry stands ready to work with the U.S. government to ensure the U.S. remains the leader in the game-changing technologies of today and tomorrow.
1101 K Street NW Suite 450, Washington, DC 20005