The Semiconductor Industry Association (SIA) today applauded House passage of critical CHIPS Act investments totaling $52 billion to strengthen domestic semiconductor manufacturing and research as part of the America COMPETES Act of 2022. The Senate passed funding for the CHIPS Act as part of its version of competitiveness legislation called the United States Competition and Innovation Act (USICA) in June 2021. House and Senate leaders must now work on reconciling differences in the bills and passing bipartisan legislation to be signed by the president.
“House passage of CHIPS Act investments is a significant step toward strengthening America’s leadership in semiconductors, which are foundational to our economy, national security, and global leadership in the transformative technologies of now and the future,” said John Neuffer, SIA president and CEO. “We urge leaders in the House and Senate to work together promptly on a bipartisan, bicameral competitiveness bill containing CHIPS Act investments that can be passed by both chambers and signed into law by the president. Getting this legislation across the finish line will help strengthen U.S. chip production and innovation for many years to come.”
The share of modern semiconductor manufacturing capacity located in the U.S. has decreased from 37% in 1990 to 12% today. 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 been 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.
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 has called for enacting this legislation and expanding it to cover both semiconductor manufacturing and design.
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 authorized incentives for domestic semiconductor manufacturing and investments in chip research, but funding must be provided to make these provisions a reality. 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.