US CHIPS Act Needs Stronger Congressional Backing NOW!
I grew up in San Jose, CA. When I was born here, this city and area was filled with orchards of apricot, peach, cherry, and other fruit trees and was known then as “The Valley of Heart’s Delights.” Two of the largest canning factories were only a few miles from my house, and during the summer, I would wake up in the morning to the smell of apricots, peaches, and plums cooking as the fruit was prepared for canning.
However, with the birth of the semiconductor industry in the late 1950s, our region underwent a radical transformation that made it what is known today as Silicon Valley. Companies like Shockley Semiconductor, Fairchild, Intel, and dozens of others who created semiconductors and related technology took root in our region. Now thousands of tech companies call this area their home. Sadly almost all of the orchards are gone and replaced by business complexes and housing to support the growing tech companies in the Valley.
In our digital age, semiconductors have become a foundational technology not only in digital devices but in everything from refrigerators and a plethora of home appliances to cars, planes, and just about every form of transportation that exists today.
Initially, all semiconductor manufacturing was in the U.S. But by the end of the last century, that had primarily shifted to Asia. Today over half of the world’s chip-making is in Taiwan, and only about 12% is in the U.S.
In January of 2021, Congress passed the Creating Helpful Incentives to Produce Semiconductor (CHIPS) for America Act.
Then in June 2021, the U.S. Senate passed the United States Innovation and Competition Act (USICA) which appropriates funds to finance the programs outlined in the CHIPS Act. USICA includes $39 billion for chip plant construction over five years and another $11.2 billion for the CHIPS act for research and development.
In a report from the Center for Strategic and International studies, they pointed out that-
“USICA is a sweeping piece of legislation which includes a range of initiatives meant to boost innovation within the United States, including investment in regional technology centers across rural and micropolitan America. Despite passing the Senate with a 68-32 vote, some House Democrats disagreed with portions of the bill dealing with funding for federal research and technological innovation. After a failed attempt to attach USICA to the FY22 National Defense Authorization Act in November 2021, Senate Democrats agreed to wait until 2022 to reconcile the bill with their House counterparts.
In late January, House Democrats unveiled their own version of USICA, titled the America COMPETES Act, which includes identical funding for the CHIPS Act ($52 billion) but cuts roughly $200 billion, which USICA dedicated towards other programs like regional technology hubs. The bill received praise from Senate Democratic leaders and President Biden, but the America COMPETES Act will still likely face a lengthy reconciliation period as lawmakers deliberate over provisions that the House bill omits.”
While the Senate and House dawdle with this urgent issue, the threat of China taking control of Taiwan, a goal from which they will not be deterred, grows daily. Just imagine if China had Taiwan under their control and, by default, would be lord over 50% of the world’s semiconductor manufacturing.
Some legislatures argue that it is up to the industry to solve this problem. Yet, over history, the U.S. government and military-funded significant technological achievements that have benefited it and society. Moreover, this argument holds little water given the major threat of China’s move on Taiwan and possibly controlling a large percentage of semiconductor manufacturing that it could hold hostage and use as bargaining chips to get its way in the future.
Intel, Samsung, and even TSMC are working hard to build semiconductor plants on U.S. soil, but at best, they will not be up and running until 2024-2025. Add to that the concern that the U.S. cannot even field the amount of tech talent needed to run these plants when they come on line in the future.
Fierce Wireless shared a critical report on this last issue-
“A new report estimates the U.S. will need to add 70,000 to 90,000 jobs to serve up to 20 domestic fabs in coming years for the most critical semiconductor applications. To meet that number, the U.S. needs to increase its workforce talent by 50%, according to Eightfold A.I.’s report.“
Our legislatures need to wake up to this desperate need to bring control of semiconductor manufacturing back to the U.S. and allow the U.S. to control its technology destiny. These big semiconductor companies invest billions of their own money in these U.S. fabs. A significant boost of funds from the U.S. government could go a long way towards speeding up the process and also help train more tech workers needed to operate these new fabs.
This week, GlobalWafers Co. said it planned to put a factory in Sherman, Texas, that would be the first U.S. silicon wafer factory in more than two decades in the U.S. and create as many as 1,500 jobs. However, the company stated that the plant would require financial incentives included in the CHIPS Act to move forward.
The WSJ reported the following statement from GlobalWafers’ president about the importance of passing the CHIPS act for them to proceed-
“If the CHIPS Act is not passed, we have to pivot to South Korea,” said the company’s president, Mark England, who said costs there would be substantially less. “
All three branches of the U.S. government must prioritize and push this legislation with broad support from both parties and reconcile these bills quickly. Every day they wait to pass this vital act is another day closer to the potential of China’s ability to control the future of at least 50% of semiconductor manufacturing.