US must prioritise semiconductor funding: SIA

Industry groups are calling on US president Joe Biden to include robust funding for semiconductor manufacturing and research as part of his planning for the country's economic recovery and infrastructure strategy.

"The costs of inaction are high," the Semiconductor Industry Association (SIA) said today in a letter addressed to Biden, adding that semiconductors are critical to the US' economy and national security. The letter is co-signed by several major chip manufacturers including Qualcomm, Nvidia, GlobalFoundries, Intel, Qorvo, ON Semiconductor and Skyworks Solutions.

Some legislative progress has been made recently, with the 2021 defence bill enacting the CHIPS for America Act, which authorised federal incentives for semiconductor manufacturing and increased investment in semiconductor research. The SIA is calling on Biden and Congress to move forward with funding these initiatives and "make them a reality".

Semiconductors have jumped to the forefront of many manufacturers' concerns globally — particularly those involved in automotive and electronics — with an acute supply shortage emerging in late-2020 as auto companies attempted to ramp production back up and found themselves competing for material with a booming electronics industry. As a result, vehicle production has been reduced worldwide and numerous electronic devices are in short supply.

Many countries, including the US, have been left particularly vulnerable to the supply shortage because they lack any or enough semiconductor manufacturing capacity domestically, with the world leaning heavily on major Asian producers, particularly Taiwan's TSMC and South Korea's Samsung.

The US accounts for just 12pc of global semiconductor manufacturing, down from 37pc in 1990, the SIA notes, adding that this is "largely because the governments of our global competitors offer significant incentives and subsidies to attract new semiconductor manufacturing facilities, while the US does not. Others have also increased research and development investment substantially, while US investment in research has been relatively flat. As a result, the US is uncompetitive in attracting investments in new fab construction and our technology leadership is at risk in the race for pre-eminence in the technologies of the future, including artificial intelligence, 5G and 6G, and quantum computing."

By Ellie Saklatvala