Semiconductor Giants Unite to Lobby for Domestic Manufacturing Funding
Leading semiconductor manufacturers and tech giants are pressuring lawmakers to spend $50 billion on the CHIPS for America Act.
Facing a global chip shortage and growing international competition, a newly formed collective of the world’s leading chip companies and other tech giants have penned a letter urging Congress to allocate $50 billion for domestic semiconductor manufacturing and research.
The Semiconductors in America Coalition (SIAC) includes participation from leading market players in the U.S. and abroad.
The funding would go towards the Creating Helpful Incentives for Producing Semiconductors (or CHIPS) for America Act, bipartisan legislation first introduced last June to provide tax credits and other incentives supporting semiconductor production, equipment and R&D activities. The CHIPS for America Act was authorized through the $740.5 billion 2021 National Defense Authorization Act passed late last year, but it didn’t appropriate the necessary funds and incentives to prompt a semiconductor industry recovery.
The newly formed Semiconductors in America Coalition (or SIAC) is calling for Congress to unlock the $50 billion boost to the U.S.’s manufacturing capacity, competing with China and other rising global leaders. The coalition includes AMD, Analog Devices, IBM, Intel, NVIDIA, Texas Instruments, Maxim Integrated and other chip giants, alongside major customers like Amazon Web Services, Google, Apple, AT&T and Verizon, Microsoft, General Electric, Cisco, Hewlett Packard Enterprise, Dell Technologies, Arrow Electronics and Honeywell, among others. Despite its name, the SIAC involves several international companies, including U.K.-based ARM, Germany’s Infineon, Netherlands-based NXP, South Korea’s Samsung, Kioxia in Japan, and the Taiwan Semiconductor Manufacturing Company (or TSMC).
The SIAC’s proposal is in line with President Joe Biden’s $2 trillion infrastructure plan, which would subsidize $50 billion for semiconductor manufacturing and research as outlined in the CHIPS for America Act. Biden previously signed an executive order to address the global chip shortage hitting electronic vehicle makers and other markets. The policy would launch a 100-day review of industry sectors and supply chain challenges, prompted by mounting concerns over national security and global competitiveness.
In its letter to lawmakers, the SIAC said that with foreign governments offering attractive subsidies to fund new fabrication and research facilities abroad, it is now 20% to 40% more expensive to build and operate new fabrication facilities domestically. This funding gap shrunk the U.S.’s semiconductor market share to 12%, added the SIAC citing a September 2020 report from the Semiconductor Industry Association and the Boston Consulting Group.
Comparatively, a recent Congressional Research Service report noted that the Chinese government has poured about $150 billion into growing its semiconductor industry, with an additional $1.4 trillion earmarked in its new five-year plan for strategic markets like semiconductors.
Image source: Semiconductor Industry Association and Boston Consulting Group, Government Incentives and US Competitiveness in Semiconductor Manufacturing Report (page 10)
The SIAC also urged the government to refrain from intervening as companies work to correct the supply-demand imbalance causing the semiconductor shortages. But in the long-term, they encouraged funding the CHIPS Act to “build the additional capacity necessary to have more resilient supply chains to ensure critical technologies will be there when we need them.”
“Manufacturing incentives funded by Congress should focus on filling key gaps in our domestic semiconductor ecosystem and cover the full range of semiconductor technologies and process nodes—from legacy to leading-edge—relied on by industry, the military, and critical infrastructure,” the letter added.
The SIAC’s message is echoed by the Semiconductor Industry Association alongside cross-industry groups like the National Association of Manufacturers, the Aerospace Industries Association, the National Defense Industrial Association, the Motor and Equipment Manufacturers Association, the Telecommunication Industry Association, and more.
Days after submitting the letter, the SIAC voiced its support for the bipartisan Endless Frontier Act, which authorizes over $100 billion for science and technology research and development across a variety of fields, from semiconductors to artificial intelligence and quantum computing to biotechnology, data storage and cybersecurity.
Meanwhile, many leading chipmakers are already upping their investments in American manufacturing operations. Taiwan Semiconductor Manufacturing Co. is reportedly spending $35 billion to build an advanced fabrication facility in Arizona—up from its initial $12 billion investment announced last year. Intel also recently announced a $20 billion expansion to its semiconductor fabrication plant in Arizona. And Samsung is seeking a deal with Texas for a new $17 billion chip factory in Austin.