Biden Calls for CHIPS Act to Rescue US Semiconductor Industry

Ongoing supply chain shortages and global geopolitical uncertainty have taken a toll on the US semiconductor industry, but the beleaguered sector might have received a slight jolt of confidence earlier this week.

During Tuesday evening’s State of the Union speech, President Biden called on Congress to pass the Creating Helpful Incentives to Produce Semiconductors for America Act (CHIPS Act), which would allocate $52 billion for semiconductor manufacturing as well as semiconductor research and development. According to the Semiconductor Industry Association (SIA), the legislation is designed to strengthen US capacity in the semiconductor industry, which has declined from 37 percent in 1990 to 12 percent today.

Biden’s plea for Congress to pass the CHIPS Act comes as a renewed interest in onshore manufacturing is being shown by U.S. chipmakers, led by Intel, which in January announced it would build two new assembly plants in New Albany, OH, outside Columbus. The project would create 7,000 construction jobs and eventually employ 3,000, according to Intel.

“Intel’s CEO, Pat Gelsinger, who is here tonight, told me they are ready to increase their investment from $20 billion to $100 billion,” Biden stated in his address. “That would be one of the biggest investments in manufacturing in American history. And all they’re waiting for is for you to pass this bill. So let’s not wait any longer. Send it to my desk. I’ll sign it.”

Related:Will Increased Manufacturing Capability Mean More Jobs? Ask the Semis

Proponents of the CHIPS act say the bill is needed for the US to compete with China and other offshore locations where major global electronics companies have established huge semiconductor fabs and assembly plants, resulting in the relocation of thousands of manufacturing jobs. To a lesser extent, research and development have also been affected as some companies have also set up engineering design centers abroad, siphoning even more jobs.

While Biden’s remarks were encouraging, the passing of the CHIPS Act is far from a slamdunk. The Senate originally approved funding for the CHIPS Act in June 2021, with the House of Representatives approving CHIPS Act funding early last month. However, the version passed by the House does not contain $190 billion to fund technology and research. It does allocate $45 billion to fund supply-chain activities related to critical goods, industrial equipment, and manufacturing technology.

The House version of the CHIPS Act bill also includes, among other provisions, changes to Trade Adjustment Assistance programs that would help workers whose wages or jobs are hurt by imports.  It also contains spells out several reforms that would enable the Department of Commerce to impose tariffs on companies receiving government subsidies to operate in different countries.

Related:President Biden's Infrastructure Package 50 Years in the Making

Reconciling the differences will be critical to passing the CHIPS Act, which has been endorsed by electronics companies and industry trade associations.

In a statement Tuesday, the SIA reiterated its support of the bill and President Biden’s remarks during the State of the Union address.

“Semiconductors are foundational to America’s economy, defense systems, and global leadership in the technologies that will determine our future,” said SIA President and CEO John Neuffer.“With other governments around the world taking ambitious action to strengthen their own semiconductor capabilities, the time has come for leaders in Washington to fund the CHIPS Act and enact a strengthened FABS Act to keep America at the forefront of chip technology.”

Spencer Chin is a senior editor with Design News.