CHIPS for America Act Would Strengthen U.S. Semiconductor Manufacturing, Innovation

by Semiconductor Industry Association

New bipartisan legislation, introduced in the Senate by Sens. Cornyn (R-Texas), Warner (D-Va.), Risch (R-Idaho), Sinema (D-Ariz.), and Rubio (R-Fla.) and in the House by Reps. Matsui (D-Calif.) and McCaul (R-Texas), would counter competing nations’ massive government incentives and strengthen U.S. economy, national security

WASHINGTON—June 10, 2020—The Semiconductor Industry Association (SIA) today applauded the introduction in Congress of the Creating Helpful Incentives to Produce Semiconductors for America Act (CHIPS for America Act), bipartisan legislation that would invest tens of billions of dollars in semiconductor manufacturing incentives and research initiatives over the next 5-10 years to strengthen and sustain American leadership in chip technology, which is essential to our country’s economy and national security. The bill was introduced today by Sens. John Cornyn (R-Texas), Mark Warner (D-Va.), Jim Risch (R-Idaho), Kyrsten Sinema (D-Ariz.), and Marco Rubio (R-Fla.) in the Senate, and a House version is slated to be introduced Thursday by Reps. Michael McCaul (R-Texas) and Doris Matsui (D-Calif.).

“Semiconductors were invented in America and U.S. companies still lead the world in chip technology today, but as a result of substantial government investments from global competitors, the U.S today accounts for only 12 percent of global semiconductor manufacturing capacity,” said Keith Jackson, President, CEO, and Director of ON Semiconductor and 2020 SIA chair. “The CHIPS for America Act would help our country rise to this challenge, invest in semiconductor manufacturing and research, and remain the world leader in chip technology, which is strategically important to our economy and national security. We applaud the bipartisan group of leaders in Congress for introducing this bill and urge Congress to pass bipartisan legislation that strengthens U.S. semiconductor manufacturing and research.”

The U.S. currently maintains a stable chip manufacturing footprint, but the trend lines are concerning. There are commercial fabs in 18 states, and semiconductors rank as our nation’s fifth-largest export. However, significant semiconductor manufacturing incentives have been put in place by other countries, and U.S. semiconductor manufacturing growth lags behind these countries due largely to a lack of federal incentives.

The CHIPS for America Act includes a range of federal investments to advance U.S. semiconductor manufacturing, including $10 billion for a new federal grant program that would incentivize new domestic semiconductor manufacturing facilities. The bill also includes a refundable investment tax credit for the purchase of new semiconductor manufacturing equipment and other facility investments.

Research is critical to advancing semiconductor innovation in the U.S. American semiconductor design and manufacturing companies invest approximately one-fifth of revenue in R&D, almost $40 billion in 2019, representing the second-highest rate of research investment of any industry. Federal government investment in semiconductor research, however, is only a small fraction of total semiconductor R&D in the U.S. and has been relatively flat as a share of GDP for many years. Meanwhile, China and others are increasing their government research investments.

The CHIPS for America Act would make significant federal investments at the Department of Defense, the National Science Foundation, and the Department of Energy to promote semiconductor research and drive chip technology breakthroughs. The bill would establish a National Semiconductor Technology Center to conduct research and prototyping of advanced chips, as well as create a center on advanced semiconductor packaging. These investments are needed to enable U.S. companies to maintain their technological edge in semiconductor materials, process technology, architectures, designs, and applications.

“As global competitors invest big to attract advanced semiconductor manufacturing to their shores, the U.S. must get in the game and make our country a more competitive place to produce this strategically important technology,” said John Neuffer, President and CEO of the Semiconductor Industry Association. “We commend the bipartisan original cosponsors in both the Senate and House for their leadership in introducing this bold, timely legislation and urge Congress to move forward on a bipartisan basis to strengthen the bill and bolster domestic semiconductor manufacturing and research.”