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The Government Circuit: Help IPC Advocate for Our Industry

Here in Washington, it is shaping up to be a busy end of year, and time is running out for the U.S. Congress to complete several priorities before the current “lame duck” session ends. As of this writing, Congress must still fund the government beyond Dec. 16, increase the debt ceiling, finalize the annual defense authorization bill, and complete any other measures relying on bipartisan support. Then the newly elected Congress will start over with a fresh slate in January.

Here at IPC, we recently released a report that highlights how advanced packaging is a key driver for microelectronics innovation, and we outlined clear steps that governments—including the U.S. government—can take to bolster advanced packaging capabilities¹. One of the report’s major takeaways is that industry leaders are interested in purchasing domestically available, advanced IC-package substrates and IC-package assembly from U.S. suppliers—if doing so is cost-competitive. We hope you take the time to delve deeper into our report and stay tuned for more “industry intelligence” reports in the coming year.

As we look toward the new year, please browse our advocacy pages, follow IPC on social media, or contact IPC’s Government Relations (GR) team if you have any questions or suggestions. We always welcome your thoughts and feedback, especially now with 2023 right around the corner. Read on below for some of the top issues we are engaged in.

IC Substrates: Build It and They Will Come?
A recent IPC report demonstrated the importance of the advanced packaging ecosystem and showed strong industry support for increased public and private investment in advanced packaging efforts¹. According to the report, 94% of electronics industry leaders believe that improving the performance of semiconductors is increasingly reliant on advanced packaging, while a further 84% believe government initiatives to bolster the semiconductor supply chain require significant investment in advanced packaging capabilities.

Additionally, the industry leaders surveyed believe that governments can, and should, do more to bolster advanced packaging capabilities, with only 29% believing policymakers appreciate the importance of advanced packaging in semiconductor innovation. A further 82% believe government initiatives to bolster semiconductor supply chains are a first step in supporting technological innovation and supply chain resiliency.

The report also showed that the United States has sufficient capacity and technology to support the advanced packaging market segment, but additional infrastructure investment is needed to successfully develop it further. Over the past year, IPC has actively called for the USG to invest in and bolster this critical ecosystem, and we will continue to beat this drum in 2023.

CHIPS Act Implementation: More Than Just Chips
IPC’s advocacy team has also been engaged in opportunities to make the industry’s voice heard on critical issues at the federal level.

Most recently, IPC outlined how electronics manufacturing must play a critical role in supporting the growth of the U.S. semiconductor industry in comments to the U.S. Department of Commerce on how to maximize the impact of the CHIPS Incentives Program.

Specifically, IPC called for USG to:

• Invest in advanced packaging ecosystem (including IC-substrates and package assembly and test)
• Invest in supply chain partnerships
• Invest in high-density interconnects
• Invest in industry-recognized workforce programs

Having collected public comments, the CHIPS Program Office (CPO) within the National Institute of Standards and Technology (NIST) is now preparing a request for proposals for funding under the CHIPS Act. That request is currently expected to be released in early 2023, and we will keep you updated on this issue.

IPC will continue to advocate in multiple forums for a “silicon-to-systems” approach. If you would like to make your voice heard in this critical debate, please contact me to get involved in our advocacy efforts.

Electronics Manufacturers Say Recession Is Inevitable
The difficult challenges many businesses have faced this year are set to continue in 2023, with electronics manufacturing industry executives see a recession as almost inevitable next year.

According to IPC’s October Global Sentiment Survey and Monthly Economic Outlook, 45% of respondents believe the economy will enter a recession in 2023, while 27% believe we are already in a recession^2-3. Industry executives expecting a recession are bracing for a longer one.

Additionally, more than four-fifths of electronics manufacturers are experiencing rising material costs, and three-fourths are reporting rising labor costs. Simultaneously, industry is seeing declines in ease of recruitment, profit margins, and inventory available. However, if there is a glimmer of hope, it is that manufacturers are expected to see a decline in backlogs over the next six months.

Overall, tight financial conditions, inflation concerns, and an uncertain economic outlook are making both businesses and consumers more cautious. Be sure to read the full report, stay tuned for next month’s reports, and please reach out if you have any questions⁴.

Industry Feedback Needed on New Environment and Health Concerns
Chemical regulators are busy this fall, and there are new opportunities to share your input.

On Nov. 10, the Federal Acquisition Regulatory (FAR) Council released a proposed rule that would require federal contractors to disclose their greenhouse gas (GHG) emissions. The rule would apply to all contractors receiving more than $7.5 million in annual federal contracts, while contractors that exceed $50 million would be further required to set emission reduction targets in line with the Paris Agreement. Comments on the rule are due by Jan. 13, 2023.

Feedback is also due on Jan. 17 on a U.S. Environmental Protection Agency (EPA) proposed rule that would significantly increase fees for EPA-initiated risk evaluations of existing chemicals under the Toxic Substances Control Act (TSCA). The EPA undergoes 20 to 30 risk evaluations each year, and even if the current list of chemical substances does not apply to your company, future lists may apply, and you may be obligated to pay at that time. In March 2021, IPC responded to the EPA’s proposed rule and acknowledged the importance of the fee rule to the electronics industry.

Let IPC’s environment and health expert Kelly Scanlon know if there is any way we can assist.

EU Parliament Adopts New Reporting Rules
In Europe, policymakers have remained active as they work to reach conclusions on long-debated legislation with potential ramifications on our industry.

After much debate, the European Parliament and EU Council recently adopted a rule aiming to strengthen the reporting requirements for sustainability information of certain large companies. The Corporate Sustainability Reporting Directive (CSRD) will require companies operating in the European Union to regularly disclose and publish detailed information on sustainability matters, including climate change, human rights, and governance. The directive is expected to affect the electronics industry with regards to resources, reporting, and transparency efforts across the value chain.

You can read more about the CSRD and the implications for our industry in IPC’s April 2021 blog⁵.

EU Ambassadors Reach Agreement on EU Chips Act
Elsewhere in Europe, on Nov. 25, EU ambassadors reached agreement on legislation to bolster the bloc’s competitiveness and resilience in semiconductor technologies and applications. The €43 billion ($44.4 billion) agreement, called the EU Chips Act, largely mirrors the European Commission’s proposal put forward in February, but it “expands the scope of what chip plants are considered ‘first-of-a-kind’ and qualify for state aid,” Bloomberg reports⁶. The text also cited packaging as an activity that can boost innovation. The EU Parliament is expected to adopt its own plan in February 2023, and we will keep you updated on its progress.

Pledge to Help IPC Advocate for Our Industry in 2023-24
The GR team is composed of experienced professionals working for you year-round, but our success depends on active participation from IPC members. With the November elections now behind us, our 2023 advocacy efforts are coming up soon. Please be sure to confirm your contact details and pledge to stay involved in IPC advocacy. We will send you information and timely action alerts, and we will make it easy to communicate with your elected officials with just a few clicks.

To my colleagues in the United States, I hope everyone enjoys a safe and happy holiday season. See you next year.

References

1. “Towards a Robust Advanced Packaging Ecosystem,” with a forward by John Mitchell, IPC.org, 2022.
2. “The Current Sentiment of the Global Electronics Manufacturing Supply Chain: Monitoring the Pulse of the Global Electronics Industry,” IPC.org, Oct. 2022.
3. “Monthly Economic Outlook,” IPC.org, Oct. 2022.
4. “One-Fourth of Electronics Manufacturers Believe We are Currently in a Recession,” IPC.org, Oct. 31, 2022.
5. “European Commission Leaps Forward in Sustainability Reporting Requirements,” by Alison James, IPC.org, April 23, 2022.
6. “EU Nations Advance €43 Billion Plan to Become Semiconductor Hub,” by Jillian Deutsch, Bloomberg.com, Nov. 23, 2022.

Chris Mitchell is IPC’s VP of global government affairs. Contact him at ChrisMitchell@ipc.org.