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American Made Advocacy: What About the Rest of the Technology Stack?

Those of us who have been in the industry for any length of time know America manufactures very little of the world’s supply of microelectronics. This happened over decades and was invisible or ignored by policymakers as companies shipped both their ideas and their production to Asia—and made a good profit in the process.

About five years ago, members of Congress on both sides of the aisle realized the pendulum had swung too far, and we were almost totally dependent on foreign nations for both the manufacturing and the workforce to produce semiconductors, integrated circuit substrates, and printed circuit boards: the essential elements of modern life.

After four years of deliberation and lobbying by some of the largest companies in the world, Congress passed the CHIPS Act, which injected a much-needed $52 billion investment into the semiconductor industry. Private investment of several hundred billion followed. Government officials’ rationale for the legislation was that it was unacceptable that our share of the production of semiconductors had fallen to 12%. While that is an attention-grabbing statistic and was a key talking point for the legislative action, it addresses just one-third of the technology stack.

Here are two more alarming statistics that have mostly fallen off the radar: We make less than 1% of the IC substrates and a mere 4% of the PCBs. This means that semiconductor fabs have the attention of legislators and policymakers, but IC substrates and PCBs are an afterthought at best. The CHIPS Act was advertised as a way to create a secure, trusted, and resilient supply chain. What has actually happened is a disconnect between stated government goals and the reality of the CHIPS Act.

In fact, we don’t solve the supply chain problem; we make it worse. As things stand now, we are all in to make semiconductors in the U.S. but have not given equal attention to the rest of the technology stack. So, when those new American-made chips roll out of the fabs, they will end up shipped to Asia to be mated with Asian-made IC substrates and PCBs and then shipped to final assembly with an end-use electronic device. The supply chain becomes more, rather than less, complicated when we address only one-third of the technology stack.

This disconnect is precisely why PCBAA was formed. Companies producing American-made IC substrates and PCBs need government investment to scale up to do two things. First, we should match the production of the semiconductor industry to avoid making long trips across the world. Second, we need to reduce our dependence on foreign nations for these critical microelectronics. Being reliant on other countries for most of these components is an economic and national security risk that is not being adequately addressed.

There have been hopeful signs at the Defense Department. In recent months, the Defense Production Act Investment Account has contributed millions of dollars to several companies that produce what is needed for defense applications. We are hopeful that Congress will fully fund this account and provide what our men and women in uniform need to do their jobs in a world where technology can mean the difference between victory and defeat.

However, while defense applications are critical to national security, the volume represents only a small slice of the overall IC substrate and PCB markets. The need for trusted and secure microelectronics goes far beyond defense systems. Water systems, the power grid, air traffic control, banking, medical devices, and the rest of our critical infrastructure depend on components that come from far away countries that are sometimes global competitors.

What needs to happen is clear: IC substrates and PCBs need their own version of the CHIPS Act.

This is precisely why we are advocating for HR 3249, the Protecting Circuit Boards and Substrates (PCBS) Act. The PCBS Act calls for a 25% tax credit for companies buying American-made PCBs and substrates, along with a $3 billion investment in related research and development, physical plant, and workforce development efforts.

There are companies all over America that would benefit from the boost that the PCBS Act will provide.

PCBAA will remain vigilant in educating, advocating, and championing legislation and policies that will create more domestic manufacturing and create trusted, secure, and resilient supply chains. I invite you to join PCBAA today and add your voice to our effort to reinvigorate this essential industry.

This column originally appeared in the April 2024 issue of PCB007 Magazine.