Pass the CHIPS Act to seize America’s big semiconductor opportunity

The stakes could hardly be higher, and the time to act is now. Congress this week will vote on legislation called the CHIPS Act that would re-invigorate U.S. chip production and innovation, while also strengthening America’s economy, national security, and leadership in key technologies. Congress needs to approve it this week. 

The world is tilting into a sweeping digital transformation powered by semiconductors, the chips that enable our smartphones, cars, appliances, data centers, and nearly all other critical technologies of today and tomorrow. Leaders in Washington have an historic — though fleeting — opportunity to ensure America captures the coming boom in semiconductor demand and reaps the accompanying benefits for our businesses, workers and consumers.

The CHIPS Act includes grants and an investment tax credit to incentivize semiconductor manufacturing in the U.S., as well as research investments to turbocharge American chip innovation.

U.S. government action is long overdue. Just 12% of modern chip manufacturing capacity is now located in the America, down from 37 percent in 1990. This is mostly because other countries offer ambitious government incentives, while the U.S. does not. As a result, it costs a whopping 25 percent to 50 percent more to build and operate a semiconductor fabrication site, or “fab,” here than overseas. In addition, federal investment in semiconductor research has been flat as a share of GDP for decades, while other countries have ramped up investments. This partly explains why all the most cutting-edge chips are produced in East Asia. And while America is still the global leader in semiconductor design — the complex mapping of a chip’s tiny and intricate circuitry — its lead is slipping and not assured.  

The CHIPS Act includes $79 billion in government spending over 10 years, according to the official scorekeeper for Congress, the non-partisan Congressional Budget Office (CBO). The return on these investments would be far, far greater.  

In fact, the CHIPS Act would create hundreds of thousands of American jobs and spur hundreds of billions of dollars in chip company investments in the U.S. It would reinforce U.S. chip supply chains and help inoculate our country from future shortages in important downstream industries, such as autos, aerospace, medical devices and electronics. It would strengthen America’s national security, ensuring our military has access to the chips underpinning critical defense systems. And it would bolster America’s future tech workforce and help lock in U.S. leadership in the game-changing technologies of the future. 

The countries that lead in semiconductors will lead economically, militarily, and technologically for decades to come. Recognizing the strategic importance of semiconductors, governments around the world are unveiling bold incentives to lure chip production to their shores. China, South Korea, Japan, the EU and other major players in the semiconductor industry have announced hundreds of billions of dollars in new government investments for semiconductors. 

There is broad, bipartisan support for U.S. action to level the global playing field. In fact, government efforts to strengthen U.S.-based semiconductor research, design, and manufacturing have the support of business leaders, U.S. governors, members of Congress, national security experts, and two-thirds of American voters.

As the world continues getting smarter, greener, and better connected, there is no doubt there will be far more global semiconductor production and innovation. To meet this demand, the industry is right now in a major build cycle. Decisions on where to locate the next wave of fabs are being made right now. The question is not whether chip companies will invest, but rather where they will invest.

The clock is ticking, and the time to act is now. Let’s seize America’s historic semiconductor opportunity, enact the CHIPS Act, and unlock a bright, boundless future built on semiconductors.

John Neuffer is president and CEO of the Semiconductor Industry Association in Washington, D.C.