Tech coalition pushes Congress to fund US semiconductor production

Pittsburgh — The Semiconductors in America Coalition pressed Congress May 11 to include significant funding for US semiconductor manufacturing in the upcoming budget legislation to avoid future shortages of the critical computer chips.

In a letter to House and Senate leaders, SIAC said Congress has already shown a commitment to secure domestic semiconductor supply chains by enacting the CHIPS for America Act, but additional funding for the legislation's programs is needed.

"For the longer term, robust funding of the CHIPS Act would help America build the additional capacity necessary to have more resilient supply chains to ensure critical technologies will be there when we need them," SIAC said in the letter. "Manufacturing incentives funded by Congress should focus on filling key gaps in our domestic semiconductor ecosystem and cover the full range of semiconductor technologies."

The CHIPS Act authorizes federal incentives to promote semiconductor manufacturing and federal investments in semiconductor research. SIAC said it agrees with President Jo Biden's recent proposal to support these programs with $50 billion in funding to keep up with incentive programs offered in other countries.

"Governments around the world are offering significant subsidies to attract new semiconductor fabrication and research facilities," the industry group said. "As a result, it is 20%-40% more expensive to build and operate a fabrication facility in the US compared to overseas."

The US' global share of semiconductor manufacturing has declined from 37% in 1990 to 12% currently, as federal investment in the sector has remained flat for decades, SIAC added.

SIAC comprises semiconductor companies and downstream users of semiconductors. Members include Amazon, Apple, Google, General Electric, Microsoft and Verizon, among several dozen other companies in the technology sector.

Impact of shortage on automotive

The current shortage of semiconductors disrupted supply chains and production in several global industries. As one example, automotive industry analyst Edmunds said the global chip shortage has severely constrained the supply of new vehicles at a time of high demand.

"New vehicles, particularly new trucks and SUVs, are basically the 2021 equivalent of toilet paper and hand sanitizer a year ago," Jessica Caldwell, Edmunds' executive director of insights, said in a report May 6.

"Demand is staying strong as vaccinations ramp up across the country and Americans look to hit the open road in a new car, but as the chip shortage continues, there soon won't be enough vehicles to meet consumer appetites."

The tight automobile market has consequentially reduced pressure on automakers and dealers to offer discounts, thereby pushing more customers to pay above the sticker price for new vehicles.