What the CHIPS Act could mean for domestic production of computer chips, Ohio factory
Federal legislation holds the potential to increase domestic manufacturing of computer chips, including helping speed along a planned development in Greater Columbus to produce the chips.
The chips are in short supply due to a number of factors, mainly the COVID-19 pandemic.
Licking County's Jersey Township, meanwhile, has been selected by Intel, a Silicon Valley semiconductor maker, as a site for a new factory that would mean an investment of tens of billions of dollars and thousands of jobs.
Industry experts are keeping a watchful eye on the Creating Helpful Incentives to Produce Semiconductors for America Act, or CHIPS Act.
Here's what you need to know about the legislation.
What is the CHIPS Act?
The CHIPS Act includes $52 billion for domestic semiconductor production.
CHIPS was approved in January 2021 as part of the most-recent National Defense Authorization Act, but without funding.
In June, the Senate passed the Innovation and Competition Act (USICA), with a 68-32 vote. The bill included $52 billion for the CHIPS Act. But the measure has since stalled in the House of Representatives.
Why the CHIPS Act is getting so much attention
The COVID-19 pandemic has shown how much the United States depends on other countries for chips.
Chips, or integrated circuits or small wafers of semiconductor material, are used in thousands of products, including cars, cellphones, appliances, gaming consoles and medical devices.
What are computer chips? Why are computer chips so important?
Just 12% of the world's chips are made in the United States, down from 37% in the 1990s, according to industry officials. About 80% are made in Asia.
The CHIPS Act has the potential to make American chip makers more competitive.
Semiconductor executives have told lawmakers that it costs at least 30% more to manufacture chips in the United States than it does in many Asian countries because labor is more expensive here and many Asian countries have spent the last two decades growing their market share of the semiconductor industry.
Intel, other semiconductor producers, pushing for Congress to fund CHIPS Act
Intel CEO Pat Gelsinger, in a December op-ed for CNN, said federal support for domestic chip production may not erase the current chip shortages, but will "be fundamental in avoiding them in the future."
"Given that so much of the semiconductor and technology industry supply chain resides in Asia, future risks are far greater than the shortages we are experiencing today," Gelsinger said. "Without U.S. investment to make domestic chip manufacturing competitive with other countries, America will not have sustainable access to the chips that power our economy and national defense.
Intel has also said that much of the country's defense systems rely on electronics powered by semiconductors and that federal support for the semiconductor industry would protect millions of jobs.
Where does the CHIPS Act stand?
This past fall, the Ohio Manufacturers' Association and JobsOhio asked Ohio’s federal legislators to push for congressional approval of the CHIPS for America Act to boost support for domestic semiconductor production.
“While we have no knowledge of the reported economic development project (in Licking County), the Ohio Manufacturers’ Association has urged Ohio’s congressional delegation to approve bipartisan legislation that would boost domestic semiconductor production," Augsburger said in a statement on Jan. 12.
"This would not only benefit Ohio manufacturers and their critical supply chains, it would be a huge economic win for the state and America’s heartland."
House Speaker Nancy Pelosi (D-Calif.) told reporters in December that she was convening relevant committee chairs to discuss the House version of USICA, which provides $52 billion in funding for the CHIPS Act.
Ohio's senators sent a letter earlier this month to House and Senate leaders urging them to pass the USICA.
“The need for this funding is self-evident: over the summer, General Motors, Ford, and other automotive companies announced short-term plant closures in Lima and Toledo, in many cases due to pandemic-related production issues at overseas manufacturers of automotive-grade chips,” Sens. Rob Portman and Sherrod Brown wrote.
Ohio's GOP congressional delegation sent a similar letter last week to the House and Senate leaders, saying that chips play an essential role in day-to-day American life and are critical to national security.
"With production of U.S. military defense systems dependent on access to these chips, we cannot afford to outsource these critical components any longer," the lawmakers wrote.
Monroe Trombly covers breaking and trending news. Email him at mtrombly@dispatch.com or follow on Twitter
@monroetrombly.
This article originally appeared on The Columbus Dispatch: What to know about the CHIPS Act as Ohio chip factory planned
