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The Semiconductor Industry Association (SIA) released the following statement from SIA President and CEO John Neuffer welcoming the first meeting of the congressional conference committee tasked with negotiating final competitiveness legislation to be approved by both chambers and signed into law by President Biden. Sen. Maria Cantwell, (D-Wash.), Chair of the Committee on Commerce, Science, and Transportation, will chair the meeting. Rep. Eddie Bernice Johnson (D-Texas), Chair of the House Committee on Science, Space, and Technology, will lead the House delegation.
“Leaders in Washington have an historic opportunity to enact competitiveness legislation that strengthens the U.S. economy and national security, sharpens America’s technological edge, and reinforces U.S. leadership in semiconductor research, design, and manufacturing for decades to come. We welcome the first meeting of the conference committee and urge swift action to advance bipartisan legislation that funds the CHIPS Act and enacts a FABS Act investment tax credit for semiconductor manufacturing and design.”
On Feb. 4, 2022, the House passed critical CHIPS Act investments totaling $52 billion to strengthen domestic semiconductor manufacturing and research as part of competitiveness legislation, the America COMPETES Act. The Senate passed the same level of funding for the CHIPS Act as part of its version of competitiveness legislation, the United States Competition and Innovation Act (USICA), in June 2021. House and Senate leaders must now work on reconciling differences in the bills and passing bipartisan legislation to be signed by the president.
An investment tax credit for semiconductor manufacturing and design, as called for by the FABS Act introduced in the House, is an important complement to the manufacturing incentives and research investments in USICA and America COMPETES. The House FABS Act should be included in the competitiveness legislation being negotiated.
The share of modern semiconductor manufacturing capacity located in the U.S. has decreased from 37% in 1990 to 12% today. This decline is largely due to substantial manufacturing incentives 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 existing U.S. tax incentives for R&D lag those of other countries. Furthermore, global semiconductor supply chain vulnerabilities have emerged in recent years that must be addressed through government investments in chip manufacturing and research, according to an SIA-BCG study.
A combination of grants, tax credits, and research investments is needed to turbocharge U.S. semiconductor production and innovation. Enacting the House FABS Act and funding the CHIPS Act are essential components of this holistic, complementary approach to strengthening America’s semiconductor capabilities over the long term.