Every day, Americans use hundreds of millions of semiconductors. These small computers are used in seemingly everything, from smartphones, cars, televisions, washing machines, and refrigerators to aircraft, spacecraft, medical devices, and manufacturing equipment.
The list of products, equipment, and devices that rely on semiconductors is nearly endless. Over the past half-century, the continual improvement in chip computing power has been the essential factor in the relentless march of technological advancement across industries, countries, and professions. Chips have improved our lives in immeasurable ways.
They are among the most vital components fueling the American economy, the world’s largest. They are equally vital to our economy and jobs here in Kentucky. Chips are used in every phase of manufacturing Kentucky’s numerous world-class products. Kentucky manufacturers directly employ more than 260,000 Kentuckians, paying family-sustaining salaries averaging nearly $75,000 per year.
But America has lost its dominance in chip manufacturing and must solve the crises that have resulted. Congress has a chance to begin restoring America’s critical chip production capability, grow American and Kentucky jobs, and protect the nation’s security by passing the CHIPS (Creating Helpful Incentives to Produce Semiconductors) Act that is now before the US Senate.
The Covid-19 pandemic created a chip shortage that continues to ripple through nearly every facet of the Kentucky and American imported. Manufacturing plants are being idled and supply chains stretched by months or more. The dominance of American industries and the security of their employees’ jobs are being endangered by the short-term chip shortage and the dwindling American share of global semiconductor manufacturing long-term.
America’s chip-making industry is strong, but its market share has dropped significantly over the past 30 years, from 37 percent to 12 percent, as chip production has gradually drifted overseas, primarily to Asia.
The economic realities of chip reliance, a chip shortage, and America’s diminished capacity to produce chips have collided. The solution begins with the bipartisan CHIPS Act the Senate started debating this week.
Majorities of both parties in both chambers of Congress have already supported earlier versions of the bill that provides $52 billion to stimulate investment in the construction and upgrading of American chip manufacturing facilities into the next decade. Together with other measures, the legislation will start the process of fortifying America’s existing domestic manufacturing and provide a path to sustainable growth over the next several years.
Fortunately, Kentucky has a strong leader and advocate in our corner on this issue, as we have had at so many junctures: Senate Republican Leader Mitch McConnell. Kentucky’s senior senator has been a champion of American business and innovation throughout his nearly four decades in the Senate. He was one of 19 Senate Republicans to vote in favor of the original Senate bill that has now become the CHIPS Act.
Kentucky’s business leaders are grateful to Senator McConnell for his leadership on economic issues, and we need his leadership again now. Hundreds of thousands of Kentucky manufacturing jobs and millions of other American jobs depend over the long term on the restoration of a strong American semiconductor industry that is indispensable to our economy and security. Senator McConnell can lead that charge by ensuring that Congress sends the CHIPS Act without delay to the President for his signature.
Frank Jemley III is the President and CEO of the Kentucky Association of Manufacturers.