CHIPS Act was a 'vital step,' but 'historic manufacturing comeback' not secured | Opinion

Jason Oxman is president and CEO of the Information Technology Industry Council.

Everyone loves comeback stories, and the United States is at the beginning of a historic manufacturing comeback right now.

In 1990, the U.S. operated about 40% of global semiconductor fabrication capacity. By 2019, that number had fallen to around 11%. That story of decline is being rewritten.

Just last month, President Joe Biden helped break ground on a new Intel semiconductor manufacturing facility in Licking County, Ohio.

And we expect many other announcements for additional U.S.-based projects.

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All this comes on the heels of the president making history last month, when he signed the CHIPS and Science Act of 2022. This law provides an over $52 billion investment to increase domestic semiconductor manufacturing capabilities and catalyze research and development to restore U.S. leadership in advanced technologies. Continuing the momentum, President Biden recently took important steps forward to implement the bill through a new executive order.

Across the country, industries reliant on semiconductors—from consumer electronics to medical devices to fighter jets—cheered this milestone, and the technology industry was loud among them. The importance of this legislation cannot be overstated: The CHIPS and Science Act ensures the United States can restore domestic production capacity and remain on the cutting-edge of a competitive global economy.

Invented in the U.S., semiconductors are the backbone of the digital world, and the U.S. has historically led in their production. But the United States failed to keep up with other nations’ incentives for chip manufacturers, and capacity shifted overseas. Domestic semiconductor production plummeted by 70% after 1990, and today, the U.S. produces only about 10% of global supply.

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How we got here

Where did chip manufacturing go?

To other countries, which hardly have an incentive to help the U.S out of its supply chain crisis.

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And when the pandemic-era demand for digital services and products spiked alongside production slowdowns, consumers paid the price—or were forced to go without. The resulting shortage impacted nearly every sector of the economy, from information and communications technology to healthcare to transportation. The U.S. government and its vendors, particularly in the defense industry, are also large consumers of semiconductors, making resolution of supply constraints a national security imperative.

That’s why the CHIPS Act is so vital. It will help ease these shortages, strengthen the innovation ecosystem, improve national security capabilities, create jobs, and maintain America’s competitive edge and technological leadership, while also boosting both manufacturing and economic growth.

But these developments will only come to pass if the law is fully and effectively implemented, which we outlined in a recent letter to Commerce Secretary Gina Raimondo.

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The explosion in global demand for semiconductors means the only question is where, not whether, production will happen. The spate of recent announcements of new U.S. semiconductor manufacturing investments from U.S. and global companies proves that this legislation is already working.

The U.S. must maintain that momentum.

But manufacturing is complex and expensive, and new facilities cost tens of billions of dollars and years of work. With the European Union, South Korea, Taiwan, and China all investing, the U.S. cannot risk falling behind our allies or competitors.

The work is far from done

Now that the CHIPS and Science Act is law, the U.S. government must bring the same urgency it had for passing the bill to carrying out its implementation, including allocating incentive grant funding and launching research and development initiatives.

Furthermore, the government can and should help inculcate a qualified, expanding semiconductor workforce, cooperating openly with allies both foreign and domestic. That will mean significant funding for science, technology, engineering, and mathematics and computer science education, plus other measures to prepare and attract the best and brightest from around the world.

What’s more, strategic investments going forward should be accessible to all capable manufacturers that meet legal requirements, irrespective of their industry specialties or headquarters’ locations. That principle will keep the U.S. competitive, well-supplied, and a good partner to global allies and multisector innovators.

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Finally, government and industry must work together—meaningfully and carefully—to achieve the trusted, secure, and reliable global semiconductor supply chains we all require. These public–private partnerships are indispensable for protecting national security, supporting innovation, and maintaining economic growth.

Congress still has more work to do to advance the American innovation economy, including furthering tax incentives for research and development by U.S. businesses.

But the CHIPS Act is a vital step toward next-generation manufacturing investments in the U.S., and the Information Technology Industry Council and the tech industry stand ready to support the U.S. government, and we offer our industries’ expertise to ensure the smooth implementation of the CHIPS and Science Act.

We look forward to the continued advancement of U.S. technology leadership and leveraging the world-class American manufacturing base and workforce.

Jason Oxman is president and CEO of the Information Technology Industry Council.

This article originally appeared on The Columbus Dispatch: Opinion: CHIPS Act vital to microchip manufacturing, economic growth