Regaining U.S. Chip Competitiveness

In the IC industry, companies compete in a multitude of different markets. At the same time, there is competition among nations on several different fronts. In technology, for example, various nations are competing for supremacy in 5G, AI and quantum computing.

China has rekindled the worldwide competition in semiconductors. Backed by $150 billion in funding, the country is developing its domestic IC industry and plans to make more of its own chips.

Meanwhile, eighteen members of the European Union recently launched an initiative to boost the EU’s efforts in semiconductor technologies. The member nations will also work together to bolster leading-edge manufacturing capacity. The EU plans to invest more than $145 billion in the effort.

The U.S. has also launched various strategies to bolster its chip efforts, including a proposed bill from the U.S. Congress. The bill, called the Creating Helpful Incentives to Produce Semiconductors for America Act (CHIPS), calls for $10 billion for a new federal grant program that would incentivize building new U.S. fabs. It also includes an investment tax credit. In total, it’s a $22 billion package.

Today, though, the bill is stuck in Congress. On the bright side, the U.S. government recently passed the National Defense Authorization Act (NDAA). The NDAA includes Title XCIX, “Creating Helpful Incentives to Produce Semiconductors for America,” which sets forth provisions authorizing the establishment of federal incentives to promote semiconductor manufacturing and federal investments in semiconductor research in the U.S.

To get a handle what the NDAA means for the U.S. chip industry, Semiconductor Engineering talked to David Isaacs, vice president of government affairs at the U.S. Semiconductor Industry Association (SIA).

SE: What does the passage of the NDAA mean now? Assuming it is signed, what happens next?

Isaacs: Enactment of the NDAA would greatly strengthen America’s economy and national security and would be a landmark victory for semiconductor manufacturing and research in the U.S. The legislation authorizes robust federal manufacturing incentives and research initiatives that, once funded through the appropriations process, will make the U.S. one of the world’s most attractive locations for new chip fabs and research. SIA strongly urges the president to sign the NDAA into law, and we look forward to working with leaders in Washington to put these provisions into action by fully funding them.

SE: Does the passage mean that the U.S. government will now authorize funding for chip R&D and/or fabs?

Isaacs: The NDAA authorizes funding for semiconductor manufacturing incentives and research initiatives, but funding levels for these programs will still depend on approval of future appropriations legislation. It is crucial that throughout appropriations negotiations in 2021, the provisions put forth in the NDAA are fully funded and supported. To remain on competitive footing with other global tech leaders, many of whom provide significant subsidies for chip manufacturing and research, robust federal investments are needed. Authorizing this funding is vital for U.S. national security and supply chain resilience, as well as job creation and continued American leadership in green energy innovations, healthcare and medical advancements, and infrastructure technology — all of which depend on a strong American semiconductor industry.

SE: Does it impact the CHIPS bill?

Isaacs: The CHIPS for America Act was a bold move towards further federal investment in domestic semiconductor manufacturing and research. We commend the original bipartisan sponsors of the bill and additional members who advocated for its provisions to be included in the NDAA. Much of what is authorized in the NDAA stems from what was first introduced in the CHIPS bill, along with another bill, the American Foundries Act. Once the NDAA is enacted, these provisions need to be fully funded as part of the NDAA appropriations next year. Pieces of the CHIPS bill that were not authorized in the NDAA, including investment tax credits and research centers, remain a top priority. SIA will continue vigorously advocating for their implementation.

SE: Anything else?

Isaacs: Passage of the NDAA and inclusion of semiconductor provisions and programs is a major step forward, not only in the American chip industry, but for our country’s future. The technologies and systems enabled by a strong domestic chip industry are foundational for our economy and our competitiveness. Passing and fully funding the NDAA is an essential step in setting up the nation for success.