By Jeff Rittener, Chief Government Affairs Officer for Intel
The United States’ share of semiconductor manufacturing has plummeted in recent decades, according to a recent joint study by the Semiconductor Industry Association (SIA) and Boston Consulting Group (BCG). The study, which analyzed the impact of proposed federal incentives on the domestic semiconductor manufacturing industry, found that while American companies account for 48 percent of the world’s chip sales, U.S.-based fabs account for only 12 percent of the world’s semiconductor manufacturing, down from 37 percent in 1990.
One reason for the manufacturing decline in the U.S. is that competing foreign governments offer large incentives for semiconductor fabs, while the U.S. does not. Compared to other countries, U.S.-based fabs cost 40-70 percent more due to low federal incentives. According to the SIA and BCG report, substantial federal incentives would turn around the long trajectory of declining chip production in the U.S. by adding new major semiconductor manufacturing facilities and thousands of high-paying American jobs over the next 10 years.
Semiconductors are everywhere: they are what make our cell phones, computers, televisions, medical devices and more, function. Today, advanced semiconductor chips also power the platforms needed for future technologies like artificial intelligence (AI), 5G, quantum computing and our most advanced military capabilities.
At Intel, semiconductor manufacturing is at the heart of who we are and what we do. We invest tens of billions annually in R&D and capital expenditure to support and expand manufacturing operations in the U.S. and worldwide. Still, a modern semiconductor manufacturing plant requires an investment upwards of $10 billion, which is why we strongly support the Creating Helpful Incentives to Produce Semiconductors for America or CHIPS Act. The CHIPS Act is included in the FY2021 National Defense Authorization Act (NDAA) and will provide federal incentives to build semiconductor manufacturing plants in the United States.
Recently passed by Congress with strong bi-partisan support, the CHIPS Act establishes a program through the Department of Commerce to provide up to $3 billion in federal financial assistance to companies to invest in facilities and equipment in the U.S. for semiconductor fabrication, assembly, testing, advanced packaging, or research and development.
The U.S. is now positioned to regain our leadership in the semiconductor manufacturing industry and significantly contribute to the nation’s economic and technological success. We need federal investment to do so. The leadership we could attain with such investments is vital to strengthening our national security and the American economy.
Right now, America finds itself at a crossroads in the global chip-making industry. Private industry, the federal government and academia must work together and continue to invest in U.S. manufacturing to ensure future technological leadership. We urge the President to sign the NDAA and look forward to working with our partners and Congress to ensure the financial assistance program established by the NDAA is adequately funded in the next fiscal year.