Senate Passage of USICA Marks Major Step Toward Enacting Needed Semiconductor Investments

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The Semiconductor Industry Association (SIA) applauded Senate passage of needed federal investments in semiconductor technology included in the bipartisan United States Innovation and Competition Act (USICA) (S.1260), broad legislation aimed at enhancing U.S. competitiveness by promoting American leadership in science and technology. The bill, introduced by Sens. Chuck Schumer (D-N.Y.) and Todd Young (R-Ind.) as the Endless Frontier Act and expanded under its current name, includes $52 billion in federal investments for the domestic semiconductor research, design, and manufacturing provisions in the CHIPS for America Act.

“Senate passage of USICA is a pivotal step toward strengthening U.S. semiconductor production and innovation and an indication of the strong, bipartisan support in Washington for ensuring sustained American leadership in science and technology,” said John Neuffer, SIA president and CEO. “We applaud Sens. Schumer, Cornyn, Warner, Young, Kelly, Cotton, and others for their leadership in promoting federal investments in U.S. semiconductor manufacturing, research, and design and commend today’s Senate approval of these provisions in USICA. We call on the House to swiftly pass needed federal investments in domestic chip technology and send legislation to the President’s desk to be signed into law. Enactment of these investments would help strengthen America’s economy, national security, technology leadership, and global competitiveness for years to come.”

The share of global semiconductor manufacturing capacity in the U.S. has decreased from 37% in 1990 to 12% today, according to a report by SIA and the Boston Consulting Group (BCG). This decline is largely due to substantial subsidies offered by the governments of our global competitors, placing 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. And global semiconductor supply chain vulnerabilities have emerged in recent years that must be addressed through government investments in chip manufacturing and research, according to a separate SIA-BCG study. 

A May 2021 study by SIA and Oxford Economics projects that a $50 billion federal investment program to incentivize domestic semiconductor manufacturing would create an average of 185,000 temporary American jobs annually and add $24.6 billion annually to the U.S. economy as new semiconductor manufacturing facilities, or fabs, are constructed from 2021-2026. The study also finds such federal investments would add 280,000 permanent jobs to the U.S. economy beyond 2026, including 42,000 direct semiconductor industry jobs.

Recognizing the critical role semiconductors play in America’s future, Congress in January enacted the CHIPS for America Act as part of the FY 2021 National Defense Authorization Act (NDAA). The law calls for incentives for domestic semiconductor manufacturing and investments in chip research, but funding must be provided to make these provisions a reality.