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American Made Advocacy: There's No Substitute for American-made Microelectronics

The COVID pandemic put a spotlight on the fragility of the global supply chain. Disruption has become the new normal. Companies now see that one political decision or other interruption in Asia could bring the electronics industry to its knees. With 90% of the world’s PCBs and almost all IC substrates made in Asia, the current state of the electronics supply chain continues to present significant risk to the U.S. market.

Other nations are not waiting to reduce their dependency. They are making sizable investments in their own microelectronics industries. Billions of dollars are being invested on every continent by governments that see the economic opportunity and understand the nexus of industrial policy and national security.

PCBAA has been lobbying Congress to support American manufacturing in a similar fashion to their support of semiconductor manufacturing. We have introduced legislation and met with key legislators and policymakers and have seen significant interest from the defense sector. That is gratifying. However, defense is only a fraction of the U.S. market. To compete with other countries that are heavily subsidized, we need government investment to bring manufacturing back to the U.S.

We are now fulfilling 4% of the world's supply of printed circuit boards. At that level, we cannot service the volume of semiconductors projected from the new fabs being built with help from the CHIPS Act.

What is the government’s approach thus far? So far, policymakers in Washington are looking beyond our borders to support microelectronics manufacturing. While they have the stated goal to reduce our dependence on Asia—and China, in particular—other strategies are in line ahead of American manufacturing.

One of those strategies is commonly called “China Plus One.” It means having other sources in addition to China. We accept that there will always be some commoditized microelectronics sourced from China but we need to secure the supply chain for national defense and critical infrastructure. Therefore, China Plus One is not a cure-all. It is only one of the risk reduction measures being implemented by companies around the world.

“Friendshoring” is another approach being pushed. This means you reduce risk by sourcing key products from friendly nations less likely to be subject to the whims of autocratic regimes. The catch is that many of these friendly countries are still at the end of long and dangerous supply chains that have been interrupted by piracy, regional wars, shipping channel blockages, and extreme weather.

“Nearshoring” is easy to understand as it combines geographic proximity with ongoing government-to-government trade arrangements; think Mexico and Canada. This is similar to friendshoring without the troublesome distances between them and our borders.

What is missing from currently enacted legislation and U.S. government policy is support for American-made PCBs and substrates. With no government action, even with the aforementioned supply chain options, we will never reclaim even a small percentage of the ability to manufacture PCBs and IC substrates in America and retain the risks presented by current solutions.

This situation is puzzling given the amount of support there has been for semiconductor manufacturing. As anyone in the industry knows, chips don’t float. We can make more semiconductors here, but without government support to help create the demand signal that will draw private investment, the majority of those newly American-made semiconductors will travel to Asia to be packaged with Asian-made PCBs and IC substrates.

PCBAA continues to press for legislation and policy that includes the entire technology stack. For our nation to continue its current path, we will remain dependent on Asia in perpetuity. If we do nothing, nothing changes. For the sake of the hard-working men and women in American microelectronics manufacturing, we will press the government to adopt a mix of supply chain options that prioritize domestic manufacturing and supplement it with nearshoring and friendshoring.

If you are a manufacturer, assembler, or materials provider, please join us and help reinvigorate the domestic PCB industry by educating, advocating, and supporting legislation that puts us on a level playing field in the ranks of global microelectronics manufacturers. Please visit pcbaa.org for information on how to join our organization and our efforts to strengthen the U.S. PCB market.

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