The Chips and Science Act, signed into law on August 9 by President Biden, contains $52 billion in subsidies and tax credits for global chip manufacturers to expand their footprint in the USA. [1]
United States manufacturing employment decreased 33% from 1985 to 2014. During the same period, the United States semiconductor manufacturing, accounting for 1.7% of the total of the United States manufacturing workforce, lost 35% of its employees. The decline in semiconductor manufacturing jobs began in 1985 when semiconductor firms began offshoring product manufacturing overseas because of the low cost of qualified labor force and facilities. By 2021, USA-made semiconductors’ global market share was reduced to just 12%. [2]
The impact of the pandemic has certainly shown the effects of offshoring manufacturing to overseas countries by manifesting as shortages that have been felt in a variety of different sectors, from automobiles to computers. Some of the companies which have already signed on to take advantage of the incentives include Intel, which is building 2 facilities in Arizona, and two more in Ohio; and Qualcomm which is building a facility in New York. Also of note are NSi (Nuance Systems) in Oregon and Wolfspeed in New York.
The Chips and Science Act also includes an additional $200 billion towards scientific research in AI, robotics, and quantum computing, which hopes to bolster USA job education and sophisticated talent resources to support growth in the electronics, technology, and manufacturing sectors. Qualified talent took a dip for the past 2 decades as manufacturing was operating overseas indicating not only a need for actual infrastructure but the skills and leadership needed to run and operate these businesses in the USA.
Techin5: Microchip Manufacturing Reshored to USA
The Chips and Science Act contains $52 billion in subsidies and tax credits for global chip manufacturers to expand their footprint in the USA and an additional $200 billion towards scientific research in AI, robotics, and quantum computing. Is this a bad or a good thing? Learn about positives, implications and what this means for US manufacturing.
The new facilities present a few challenges in and of themselves primarily in the cost of construction which can reach as high as $20B to set up one location. [3] But also around environmental challenges bringing initiatives such as ESG to the forefront of business culture and branding. As a second note, this in turn has triggered a new market service demand – ESG Audits.
Together these combined costs will likely translate into higher unit prices for consumers, raising the cost overall for tech-based goods and services. Controversy is sure to surround the development and evolution of Made in USA chips, but our dependency on technology will likely outweigh the growing pains in this area.
On the positive side, there’s funding going into research, education as well as support industries for that. Earmarked in the additional $200 billion allocated towards scientific research and artificial intelligence, robotics, and quantum computing. This, of course, is intended to bolster USA jobs, education and sophisticated talent, and other resources to support the industries in the electronics, technology and manufacturing sectors.
Author: Christina Barea | [email protected]
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