Struggling Maryland car dealers and tech companies hoping US semiconductor push will help

Dale Pusey and his family have been selling cars in Maryland since his dad opened up the business in Fruitland, near Salisbury on the Eastern Shore, in 1978. For much of that time, when America was a global leader in semiconductor production, the little component was the last thing on this car dealer’s mind.

Not so much anymore though, as the pandemic-induced shortage of the small electronics, colloquially known as chips, has driven car prices up and the number of cars on his lot down.

“We’re stocking about a quarter of what we used to (pre-pandemic),” Pusey said. In 1990, the U.S. share of commercial semiconductor manufacturing was 37 percent; today it’s 12 percent or less.  And car dealers aren’t the only ones dealing with chips.

Whether you’re driving to work or working from home on your computer, you’re probably using a device that uses semiconductors to start your day. Chances are you’re using a device with semiconductors before you even get out of bed, when you pick up your phone.

But these small electronics have primarily been built overseas for the past few decades in Southeast Asia (Taiwan, South Korea), and after the pandemic exposed problems with the supply chain and drove up prices, lawmakers sought to bring building them back to America.

Earlier this month, President Joe Biden signed the $52.7 billion CHIPS and Science Act into law to bring the manufacturing of semiconductors back to the United States, raising the question of what effect the billions spent will have on the Old Line State.

“The CHIPS Act is an opportunity for Maryland,” said Charles Wessner, who teaches global innovation policy at Georgetown University. “If (the state) can attract a semiconductor fabrication facility they can get millions, potentially billions of dollars in support from the federal government.”

Apart from the subsidies for factories, the CHIPS Act has other provisions that could play a major role in the state’s economy, businesses, and educational institutions for years to come. And should the law be successfully implemented, there may be a few more cars back on Dale Pusey’s lot, too.

Maryland businesses and the CHIPS Act

The Pusey car dealership in Fruitland isn’t the only Maryland business that has been affected by the chip shortage. Garret Maxson’s company in Frederick has been waiting a year for certain chips and has lost workers because of it.

“We’ve had to go through a couple of downsizing events here in Frederick over the last two and a half years since the pandemic began due to an inability to secure these chips,” said Maxson, the director of operations at ACDi, which assembles semiconductors on printed circuit boards, including for the Department of Defense.

ACDi had close to 90 employees before the shortages began. Now, they’re down to 67 employees as some semiconductors are on a 52-week wait period before they’re available.

“Having to tell the U.S. Government, Department of Defense, the Navy, Lockheed Martin, Northrop Grumman that these boards that you’re putting into missiles, or radar systems, or buoys, or helicopter turrets, you’re going have to wait another year for (semiconductors) really helped push this push this piece of legislation to the forefront,” Maxson said.

He said he’s “optimistic” that when the chips start flowing, hopefully sometime next year, the business can rebound. In four to six years, Maxson said, the CHIPS Act “will be a boon for us.”

U.S. Sen. Chris Van Hollen, D-Md., said hundreds of Maryland companies rely on chips.

“Bringing down the costs, reducing the uncertainty in supply chains will be a big benefit to companies throughout the state of Maryland,” Van Hollen said during an Aug. 10 news call.

Erica Null, general manager of Tristate Electronic Manufacturing in Hagerstown, agrees, but when exactly the benefit will be apparent is another question.

Calling the CHIPS Act “beneficial” to American manufacturers struggling with supply chain shortages, she said it might take many years to see the result.

“We don’t foresee this benefiting our company within the next 1-3 years until these companies are built in the U.S. and established,” Null said in an email.

Will Maryland get a semiconductor factory?

Last year, Taylor, Texas, reached an agreement with the South Korea-based company Samsung to bring a semiconductor manufacturing facility to town. And the world’s largest chip manufacturer, the Taiwan Semiconductor Manufacturing Company, agreed in May 2020 to build a $12 billion plant in Arizona.

With the new influx of $39 billion in federal money from the CHIPS Act, and semiconductor factories also in development in both Ohio and New York, Maryland’s U.S. senators weighed in on whether some of those funds could be used to lure companies and jobs to Maryland.

“Maryland is very well situated to take advantage of the opportunities in regards to the chips being built here in the United States,” said the state’s senior Democratic Sen. Ben Cardin, during the Aug. 10 call.

The state currently ranks 23rd in the U.S. with 18 semiconductor manufacturing establishments and a total of 216 semiconductor manufacturing jobs, according to research from the Semiconductor Industry Association.

One beneficiary of the act will be the Gaithersburg, Maryland-headquartered National Institute of Standards and Technology, or NIST, which received a $321 million funding authorization increase this year from the legislation.

The law also sets aside $10 billion for the creation of 20 regional “technology and innovation” hubs, linking businesses and research institutions while also providing additional resources for science, technology, engineering, and mathematics (STEM) education at the K-12, undergraduate, and graduate levels.

Currently, there are more than 140 colleges across the country designated by the Carnegie Foundation as top, or R1 research institutions, including three in Maryland: Johns Hopkins, College Park and UMBC. None are currently historically black colleges or universities (HBCUs).

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LaKeisha Harris, dean of graduate studies and research at the University of Maryland Eastern Shore, an HBCU in Princess Anne, hopes the CHIPS and Science Act changes that. The act is set to boost the research faculty and facilities of the historically Black university founded in 1886, which currently has a high, R2 research designation.

“What I see (the CHIPS Act) doing is that it’s going to help us increase (research faculty and facilities),” Harris said. Morgan State University, a Baltimore-based HBCU, which also is designated as a high, R2 research university, might benefit from the new legislation as well.

Dwight A. Weingarten is an investigative reporter, covering the Maryland State House and state issues. He can be reached at dweingarten@gannett.com or on Twitter at @DwightWeingart2.

This article originally appeared on The Herald-Mail: CHIPS and Science Act spends big money. Will it come to Maryland?