Rising costs are a concern for everyone. It is an inescapable reality that we are paying more and more for food, transportation, housing, health care, consumer products and everything available for purchase. The sharp rise in consumer prices is disconcerting. While there is no panacea to mitigate higher prices, we can take steps to mitigate them.
Fostering increased manufacturing capacity is a particularly important step. America’s ability to manufacture goods has diminished over time and that should be cause for concern. Our country doesn’t just need to sell products, we need to make products. When we have to look abroad for the source of much of our goods, we become captive to the capricious nature of the global supply chain.
When global trade works well, all is well. When the system fails, interruptions in the timely delivery of one product from halfway around the world can disrupt all other products on the line. When the product or device is critical to all facets of our economy, delays in its arrival can be debilitating.
An American original, the semiconductor, is an essential component of myriad products, operating systems and functions that we rely on every day. We created it, built it and sent it out into the world. The chip sparked a technological revolution that continues to evolve and grow.
Yet our country has lagged in its ability to build these items while other countries, especially those in Asia, have incentivized companies and invested in infrastructure to manufacture semiconductor chips in their region. Asia-Pacific is the largest regional semiconductor market, and China is the largest single-country market. Countries in the region know this and have acted accordingly to invest in chip manufacturing facilities as our manufacturing capacity tends to decline as our chip needs continue to grow.
The share of modern semiconductor manufacturing capacity located in the United States has fallen from 37% in 1990 to 12% today. The share of semiconductor manufacturing capacity in the United States has fallen by more than 10% over the past 8 years.
Congress must do the following: 1) fund the national semiconductor manufacturing, research, and design provisions in the CHIPS for America Act; and 2) enact an investment tax credit encompassing both manufacturing and design to spur the construction of new onshore advanced semiconductor research, design and manufacturing facilities and to promote innovation national chips.
Legislation currently being negotiated by the House and Senate includes these provisions that will provide $52 billion in CHIPS funding and create an investment tax credit to incentivize the design and construction of more chips domestically. These provisions must be adopted in order for them to produce positive results.
The semiconductor industry directly employs over 250,000 workers and indirectly supports an additional 1.6 million jobs. Estimates predict that funding from the CHIPS Act alone would support an additional 185,000 new jobs and inject $24.6 billion into the economy by 2027.
We must urge Congress to help make this legislation law.