Chip investment bill may be unveiled “soon”

26 January 2022

On the same day that President Biden encouraged the House of Representatives to push through legislation to invest in U.S. domestic semiconductor manufacturing, the House may be introducing its version of the legislation this week.

In a report from Reuters, the House could come to the House floor where it then could be possibly put for a vote next week. Speaker of the House Nancy Pelosi said last week that the bill would come “soon.”

The legislation would be the House’s version of the U.S. Innovation and Competition Act (USICA), which includes funding for Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act, a bill that would help to increase U.S. domestic semiconductor manufacturing.

The bipartisan bill, introduced by Chuck Schumer (D-New York) and Todd Young (R-Indiana), aims to enhance the competitiveness of the U.S. by promoting American science and technology leadership.

Funding of the CHIPS for America Act would include $52 billion in federal investments for domestic semiconductor research, design and manufacturing provisions.

Previously, the CHIPS for America Act was passed under part of the National Defense Authorization Act (NDAA) and later as the Endless Frontier Act, and then expanded under its current name of USICA.

This funding could help with construction of new fab projects such as the recently announced fabs being built in Ohio by Intel Corp. It could also encourage foreign investments as well such as the upcoming fab project in Texas by Samsung and Taiwan Semiconductor Manufacturing Co.’s fab, which has already started construction in Arizona.

The U.S. Senate passed the bill in June of last year.

Why it matters

The share of global semiconductor manufacturing capacity in the U.S. has fallen from 37% in 1990 to just 12% today, according to the Semiconductor Industry Association (SIA). This decline is due to foreign countries offering substantial subsidies to global competitors to build new fabs. This placed the U.S. at a competitive disadvantage in attracting new chip fab construction.

This comes as the U.S. accounted for the majority of semiconductor sales worldwide in 2020, capturing 55% of the total market.

If nothing is done to correct this disparity, it is expected that the divide will grow even further with the U.S. manufacturing only 10% of the world’s chips in the next decade.

The COVID-19 pandemic revealed flaws in supply chain aggregation with most semiconductor manufacturing taking place in Taiwan, Korea and China. When supply chain issues emerge, it can be catastrophic for the entire industry. The ongoing chip shortage in the supply chain due to COVID-19 is evidence of this.

These vulnerabilities combined with a lack of competitiveness in U.S. chip production caused President Biden, U.S. Congress, trade organizations and American companies to call for increased funding for domestic chip manufacturing.

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