Reading time ( words)
The Semiconductor Industry Association (SIA) today applauded a letter sent this morning to congressional leaders by a broad coalition of 59 CEOs and senior executives urging swift action to fund the CHIPS for America Act and enact a strengthened version of the FABS Act to bolster U.S.-based semiconductor research, design, and manufacturing. The letter’s signatories represent major sectors of the economy — including chip, auto, medical device, tech, telecom, manufacturing, and others — and millions of U.S. workers.
Amid the ongoing global chip shortage, the letter highlights the need for action on the CHIPS Act and FABS Act to ensure the U.S. is home to more semiconductor production and innovation, which will strengthen America’s economy, national security, and supply chain resilience over the long term.
“Semiconductors form the nerve center of our economy, national security, and critical infrastructure. Fully funding the CHIPS Act and enacting a strengthened FABS Act would provide a critical boost to U.S.-based semiconductor research, design, and manufacturing, while also turbocharging job creation and making our chip supply chains more resilient for years to come,” said John Neuffer, SIA president and CEO. “We applaud the action taken today by CEOs from a range of critical sectors, and we urge Congress to prioritize getting these bipartisan initiatives across the finish line this year.”
The letter is the latest in a series of calls from business leaders (including semiconductor industry leaders), U.S. governors, members of Congress, national security experts, and others in support of U.S. government action to strengthen domestic semiconductor research, design, and manufacturing.
Recognizing the critical role semiconductors play in America’s future, Congress in January enacted the CHIPS for America Act as part of the FY 2021 National Defense Authorization Act (NDAA). The law authorizes incentives for domestic semiconductor manufacturing and investments in chip research, but funding must be provided to make these provisions a reality. On Nov. 17, House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.) announced an agreement to go to conference on the Senate-passed United States Innovation and Competition Act (USICA), which includes $52 billion to fund the CHIPS Act.
SIA also supports a semiconductor investment tax credit, as called for by the FABS Act, to complement the manufacturing incentives and research investments in the CHIPS Act. Congress is considering separate legislation containing a modified version of the FABS Act to provide an investment tax credit to incentivize semiconductor manufacturing in the United States. SIA supports expanding the tax credit to cover semiconductor design as well as manufacturing.
Funding the CHIPS Act, along with enactment of a strengthened FABS Act, are complementary efforts and will help enhance the global competitiveness of the U.S. semiconductor industry.
The share of global semiconductor manufacturing capacity in the U.S. has decreased from 37% in 1990 to 12% today, according to a report by SIA and the Boston Consulting Group (BCG). This decline is largely due to substantial incentives offered by the governments of our global competitors, placing the U.S. at a competitive disadvantage in attracting new construction of semiconductor manufacturing facilities, or “fabs.” Additionally, federal investment in semiconductor research has remained flat as a share of GDP, while other governments have invested substantially in research initiatives to strengthen their own semiconductor capabilities, and existing U.S. tax incentives for R&D lag behind those of other countries. Furthermore, global semiconductor supply chain vulnerabilities have emerged in recent years that must be addressed through government investments in chip manufacturing and research, according to a separate SIA-BCG study.