In a legislative session roiled by partisanship and existential debates about the direction of our country, the CHIPS Act of 2022 presents Congress a rare opportunity to deliver a crucial bipartisan victory that will help grow America’s economy and reinvigorate the nation’s leadership in technology and innovation.
The CHIPS Act seeks to provide $52 billion of investments and incentives to support America’s semiconductor manufacturing, research and development for next-generation technologies and strengthen U.S. microelectronic supply chains against undue foreign influence.
The value of semiconductors to our economy cannot be overstated. Semiconductors are essential components in products that are not only vital to America’s businesses, such as desktop computers, laptops, tablets, and smartphones, but also automobiles and domestic appliances like refrigerators and dishwashers, as well as gaming systems, among others.
This bill engenders bipartisan support among federal policymakers, state governors and former national security leaders of both parties. Twenty-two bipartisan governors have joined a singular letter to urge both houses of Congress to pass the bill, while security leaders from the Central Intelligence Agency, Joint Chiefs of Staff, and several Presidential Administrations have likewise rallied to spur support for the bill.
The benefits of the CHIPS Act of 2022 are myriad. America’s semiconductor manufacturing has slowed to a trickle in recent decades. In 1990, the U.S. share of semiconductor manufacturing was 37 percent. Today, that number limps along at 12 percent. As a result, domestic tech companies rely on foreign manufacturers for nearly 90 percent of their semiconductor chips. Further, U.S. companies are dependent on politically-unstable regions for key components of semiconductors. A recent study found that over 90 percent of U.S. semiconductor neon supplies come from Ukraine, while 35 percent of pallidum is imported from Russia. It is clear that the U.S. needs to be the driving force behind its semiconductor destiny.
The CHIPS Act will also help strengthen America’s national security. Security leaders have noted that the country needs a reliable source of semiconductors and components in order to consistently produce cutting-edge microelectronics that enhance military capabilities. Over dependence on foreign nations for basic technology leaves the country exposed. Defense Secretary Lloyd J. Austin III and Commerce Secretary Gina M. Raimondo have shared that:
“If we miss this window, the United States will further behind in global semiconductor production and jeopardize our advantage in next-generation design. [The bill] will also enable the Department of Defense to help on-shore critical capabilities and innovate within our national defense industrial base.”
It’s important to remember that it’s not just tech companies that will benefit from the CHIPS Act; workers and consumers also stand to gain as well. A letter from a group of bipartisan governors noted that supply shortages have reduced production and, in some cases, idled manufacturing plants. Workers have fewer hours and less income, while consumers are pinched by higher prices and reduced choice in stores.
With the coming recesses for elected officials, the upper and lower houses of Congress have just enough runway to give lift to the CHIPS Act. The Senate is expected to vote on final passage of the bill this week, with a House vote shortly thereafter.
On behalf of more than 350 companies that drive America’s innovation economy from the heart of Silicon Valley, we urge our elected officials in Washington to pass the CHIPS Act and secure America’s semiconductor future and resilience.
By: Peter Leroe-Muñoz, SVLG’s General Counsel and Senior Vice President of Technology & Innovation