Friday, 12 June 2020 09:38

US pollies push bill to bring back semiconductor manufacturing Featured

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US pollies push bill to bring back semiconductor manufacturing Image by mihalacheionutcatalin from Pixabay

Two American politicians are championing a bill that will attempt to bring manufacturing of semiconductors back to the country, by upping the incentives to "stimulate advanced chip manufacturing, enable cutting-edge research and development, secure the supply chain and bring greater transparency to the microelectronics ecosystem, create American jobs, and ensure long-term national security".

The bill, which envisages setting aside a sum of US$22 billion for various initiatives, was drafted by Senator John Cormyn, a Republican from Texas, and Mark Warner, a Democrat who is vice-chairman of the Senate Select Committee on Intelligence. It was to be introduced in the House of Representatives on Thursday.

In a statement, Cormyn said while the US led the world in chip design, most of the actual hardware was manufactured outside America.

He said the bill — titled Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act — "would help stimulate advanced semiconductor manufacturing capabilities domestically, secure the supply chain, and ensure US maintains our lead in design while creating jobs, lowering our reliance on other countries for advanced chip fabrication, and strengthening national security".

The bill comes in the wake of new moves by the US Commerce Department to block Chinese telecommunications equipment vendor from gaining access to advanced semiconductors which it used in the manufacture of smartphones and 5G base stations, among other hardware.

Huawei was placed on a US blacklist a year ago that prevented it from buying American products that had more than 25% of local content. But it was able to get past this obstacle by obtaining American products from branches of US companies outside the country.

Last month, the Commerce Department made changes in the country's Foreign Direct Product Rule which places some goods made abroad under US regulations if they are based on American technology or software, or made using American equipment.

The same day that this announcement was made, Taiwan Semiconductor Manufacturing Company, the biggest contract chip maker in the world, said it would be setting up a plant in Arizona at a cost estimated to be about US$12 billion.

The bill put forward by Cormyn and Warner aims to:

Create a 40% investment tax credit for qualified semiconductor equipment (placed in service) or any qualified semiconductor manufacturing facility investment expenditures through 2024. It gets reduced to 30% in 2025, 20% in 2026, and phases out in 2027.

Ask the commerce secretary to create a US$10 billion federal match program that matches state and local incentives offered to a company for building semiconductor fabs with advanced manufacturing capabilities.

Create a new NIST Semiconductor Program to support advanced manufacturing in America.

Authorise funds for the Defence Department to carry out research, development, workforce training, test, and evaluation for programs, projects, and activities in connection with semiconductor technologies and direct a plan to use the Defence Production Act Title III funding to set up a domestic semiconductor production capability.

Asks the commerce secretary to submit a report in 90 days to assess the capabilities of the US. industrial base to support national defence.

Creates new R&D streams to ensure US leadership in semiconductor technology and innovation is critical to growth and national security:

  • US$2 billion to implement the Electronics Resurgence Initiative of the Defence Advanced Research Projects Agency;
  • US$3 billion to implement semiconductor basic research programs at the National Science Foundation;
  • US$2 billion to implement semiconductor basic research programs at the Department of Energy; and
  • US$5 billion to establish an Advanced Packaging National Manufacturing Institute under the Department of Commerce to establish US. leadership in advanced microelectronic packaging.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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