After more than a year after the Senate approved a $250 billion bill to support domestic semiconductor development and manufacturing, there are now two proposals in Congress that aim to provide resources for US semiconductor production, in competition with China.
Once a leader in global manufacturing, today America only produces 12% of the world’s chips. This in turn has produced a domino effect across Missouri’s manufacturing sector, as well as that of the nation, as the global supply chain crisis has exposed our over-reliance on foreign-made chips.
The manufacturers of Missouri, and across this country, are passionate, proud, and creative problem-solvers. And not every problem in manufacturing has a solution. But this is one that Congress can help fix.
American manufacturers need these chips to produce so many products, from computers to cars to medical devices to many household appliances. A shortage like the one we have endured for the past 2 years slows down their production and drives up their cost. The end result is a net negative for manufacturers and consumers, employers and workers.
Consider what happened in the auto industry as a result of the pandemic. Production of new vehicles, both domestic and international, slowed so drastically under COVID that some people are able to sell their used cars back to dealers for more than they paid for them.
The decline in market share of domestic semiconductor manufacturers is no reflection on the robustness of the industry. US semiconductor companies lead the market in innovation through research and development and added a whopping $246 billion to our GDP in 2020. American semiconductor manufacturers are competitive globally, but we need US policy this.
Over the past four decades, many foreign governments have invested heavily in chip-making initiative, including China, South Korea, Japan, and Taiwan – all prioritizing chip manufacturing. China is positioning itself to command the semiconductor manufacturing sector over the next ten years.
The US must invest in initiatives that expand our domestic semiconductor manufacturing capacity. With production and supply chains constantly threatened by new variants and unexpected wars and with an economy threatening to dip into recession, it matters more than ever.
Semiconductors are simply a vital technology that supports so many other industries, and it would be irresponsible of Washington DC to put Missouri’s manufacturers in a position to have to operate at the whim and demands of heavily-subsidized foreign chip makers.
Fortunately, there are two proposals in Congress that aim to fix this problem. The US Innovation and Competition Act (USICA), includes $52 billion in CHIPS Act grant resources to support domestic semiconductor development and manufacturing. The Facilitating American-Built Semiconductors Act, or the FABS Act, would create a 25% investment tax credit (ITC) for capital expenditures toward building out new semiconductor manufacturing facilities. Together these two important pieces of legislation form a holistic approach toward building out our domestic capability; The CHIPS Act helps manufacturers now, and the ITC ensures manufacturers have a viable path going forward into the future.
These two measures are presently under consideration in House and Senate joint competitiveness legislation that must be finalized this month. There shouldn’t be any resistance – both have broad bipartisan support in both chambers of Congress.
Senator Roy Blunt has a keen understanding of the economic, national security, and cybersecurity threats China poses to the United States. He has been unafraid to confront those threats in both word and deed in Washington. Today more than ever before, Missouri manufacturers need our Missouri delegation to fight for the interests of large and small manufacturers, and push for both CHIPS Act funding and an ITC in final joint competitiveness legislation. Let’s put American chip manufacturing back on top.
Michael Eaton is the Executive Director of the Missouri Association of Manufacturers.