The shortfall of semiconductors has resulted in several automakers halting production. The new law (CHIPS for America Act) calls for incentives for domestic semiconductor manufacturing and investments in chip research
USA’s recently elected President Joe Biden is seeking $37 billion in funding to rescue the ailing chip manufacturing industry in the United States. A report by Reuters noted that the president of America has also signed an executive order meant to address the global chip shortage. This shortage, as per the report, has alarmed the White House as well as America’s Congress.
“I’m directing senior officials in my administration to work with industrial leaders to identify solutions to the semiconductor shortfall,” Biden said last Wednesday.
He added,“Congress has authorized a bill but they need … $37 billion to make sure that we have this capacity. I’ll push for that as well.”
“We welcome the administration’s push to expand semiconductor manufacturing capacity in the US to meet increasing demand from the auto industry and other areas of the economy,” read a social media post by Tyson Tuttle, CEO, Silicon Labs.
Semiconductor manufacturing capacity in the U.S
It is to be noted here that the share of global semiconductor manufacturing capacity in the U.S. has decreased from 37 per cent in 1990 to 12 per cent today (Semiconductor Industry Association Report). U.S. semiconductor companies, on the other hand, account for 47 percent of global chip sales. This decline,as per the report, is largely due to substantial subsidies offered by the governments of USA’s global competitors, which have placed 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. The new law (CHIPS for America Act) calls for incentives for domestic semiconductor manufacturing and investments in chip research, but funding for these provisions must come through congressional appropriations.
“We welcome today’s executive order and stand ready to work with the Biden administration to ensure the strength and resilience of America’s semiconductor supply chains. As part of this effort, we urge the president and Congress to invest ambitiously in domestic chip manufacturing and research. Doing so will ensure more of the chips our country needs are produced on U.S. shores, while also promoting sustained U.S. leadership in the technology at the heart of America’s economic strength and job creation, national security, and critical infrastructure,” noted Bob Bruggeworth, president, CEO & director of Qorvo and 2021 SIA board chair.
Ajit Maocha, CEO and president, noted, “We thank President Biden and bipartisan congressional leaders for their support of incentives for U.S. semiconductor manufacturing and research. Enacting an investment tax credit and funding the programs authorized last year will help build needed semiconductor manufacturing capacity in the U.S. and reverse America’s declining share of global chip production. We look forward to working with the Biden administration and Congress on these and other policies to strengthen the semiconductor manufacturing supply chain that is the lifeblood of technology innovation driving countless societal and economic benefits worldwide.”
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