The COVID-19 epidemic has caused shortages for a wide range of businesses.
The electronics sector, for example, has experienced a supply shortfall due to strong demand and limited availability of components and printed circuit boards (PCBs).
With everyone working from home, it is hard to meet the demand for devices like computers, phones, and other home appliances.
While the pandemic certainly had a significant impact, the shortage of electrical components such as resistors, capacitors, and semiconductors started even before that due to additional taxes on imported Chinese goods. China and the United States have been engaged in a trade war since 2018. It is expected to continue through 2021, meaning even more taxes will likely hit both sides.
Semiconductors were initially invented in the U.S., which led the world to chip technology. But global competitors were quick to invest and catch up. Today, the U.S. accounts for only 12% of semiconductor manufacturing capacity.
The Creating Helpful Incentives to Produce Semiconductors for America Act (CHIPS) would be incredibly beneficial for ensuring that the U.S. keeps its leadership title in semiconductor manufacturing.
What is the CHIPS for America Act?
First introduced almost a year ago, in November of 2020, CHIPS is a bill that would provide generous incentives for semiconductor manufacturers, helping them in research, development, and manufacturing.
In simple terms, it would provide an income tax credit for electronic manufacturing facilities, helping them procure equipment for semiconductor production through 2026.
The bill also creates a trust fund that will be distributed upon achieving an agreement with foreign government partners to encourage three things:
- Consistency in microelectronics regulations
- Microelectronics supply chain transparency
- Policy alignment with non-market economies
The Latest Updates on the CHIPS for America Act (9/28/21)
To all of those who were impatiently waiting for some progress regarding the CHIPS for America Act, the Semiconductor Industry Association (SIA) released an announcement from CEO and President John Neuffer. They mainly discussed the ongoing global shortage of electrical components and the next steps they must take to improve and strengthen U.S. semiconductor supply chains.
The following statement addressed a meeting on September 23rd at the White House between leaders in the semiconductor industry and Biden Administration officials.
“We welcome today’s meeting and look forward to a productive discussion about the critical role of semiconductors to America’s economy, national security, and global technology leadership, as well as the need to strengthen our country’s chip supply chains,” Neuffer said.
“The White House has taken a series of decisive steps aimed at strengthening U.S. chip production and innovation, including initiating a study of America’s chip supply chains, convening a series of dialogues with industry leaders, and — along with leaders in Congress from both parties — strongly advocating for $52 billion in federal investments to boost domestic semiconductor manufacturing, research, and design, as called for by the CHIPS for America Act. We appreciate their ongoing efforts.”
Neuffer also mentioned that to guarantee the long-term strength of America’s semiconductor supply chains, the SIA looks forward to working with Washington leaders to finance the CHIPS for America Act and implement an investment tax credit that covers both manufacturing and design.
In January, Congress passed the CHIPS for America Act, a measure recognizing semiconductors’ vital role in America’s future as part of the National Defense Authorization Act (NDAA) for the fiscal year 2021. Domestic semiconductor production incentives and investments in chip research are allowed by law, but funding is needed to make them a reality.
The Senate approved the U.S. Innovation and Competition Act (USICA) on June 8th with a solid bipartisan majority, including $52 billion to finance the CHIPS for America Act. The SIA looks forward to Congress submitting the bill to the White House for the president’s signature.
What Does the CHIPS for America Act Mean for Semiconductor Companies and Manufacturers?
In short — it means keeping semiconductor manufacturing and innovation in the U.S.
Chips were initially invented in America, and U.S. companies still stand as leaders in the world of semiconductor technology. However, as a consequence of significant government expenditures from global rivals, the United States now accounts for just 12% of worldwide semiconductor production capacity. In 1990, that number looked somewhat different, standing at 37%.
The CHIPS for America Act is here to assist the U.S. in meeting this challenge, investing in semiconductor production and research, and maintaining the country’s position as the global leader in chip technology, which is essential to our economy and national security. We congratulate the bipartisan group of congressional leaders for proposing this measure and encourage Congress to enact bipartisan legislation that supports U.S. semiconductor production and research.
What does this all mean for manufacturers themselves? More opportunities to grow! More funding and incentives can lead to great progress. Many entrepreneurs with innovative ideas — or even finished devices that were struck by the ongoing shortage — could have the opportunity to finalize their projects.
Ongoing Semiconductor Shortage
With so much going on in the electrical component manufacturing industry, it’s important to keep up to date with the latest news.
Until further change happens, you should work to ensure that your projects aren’t suffering due to the chip shortage. Operating at optimal efficiency is possible as long as you take precautionary steps to keep your supply chain resilient.
Learn more about the shortage and what you can do to prevent it from affecting your business.