Competing for Chips - US Moves to Regain Share in Global Chipmaking
In response to the ongoing chip shortage, the House and Senate have passed The America Competes Act and the U.S. Innovation and Competition Act to address the lack of domestic semiconductor production. The objective of both bills is to increase funding and ease the pressure on the fragile global supply chain.
These bills come almost a year after President Joe Biden signed an executive order focused on investigating how the country can fortify the supply chain to prevent shortages. Findings showed the United States contribution to global semiconductor production has dropped 25% since 1990 and is estimated to decrease further if the US does not change tactics.
To increase competitiveness with other countries, The House passed The America Competes Act on Feb. 4, 2022. Included in this bill are provisions for $52 billion to make chips, $45 billion to improve supply chains for critical items and $160 billion for scientific research and innovation. Thirty-nine billion is dedicated to subsidies for new fabrication facilities.
The Senate passed its own competition bill in June 2021, the U.S. Innovation and Competition Act, which allotted $250 billion for scientific research, with $50 billion going to chip manufacturing.
Companies have praised the measures put forth by both branches as funding is already positioned to benefit manufacturers building facilities within the US. Taiwan Semiconductor Manufacturing Company has a $12 billion foundry in Arizona under construction and Intel Corporation has set aside $43.5 billion for expansion in Ohio, Arizona and New Mexico. Intel proposes their Ohio plant could grow to a $100 billion investment over the next ten years. However, that number is dependent on government assistance.
The next challenge will be negotiating the distinctions between the two bills so a joint measure can be passed to President Joe Biden’s desk. An undeniable fact going into deliberations is that the US cannot afford to delay, as the chip shortage continues to cause ripple effects throughout numerous industries.