59 US chip company CEOs wrote to congressional leaders: calling for increased domestic semiconductor investment

On December 1, the Semiconductor Industry Association (SIA) applauded a letter from a broad coalition of 59 CEOs and senior executives to congressional leaders urging swift action to fund the American CHIPS Act and enact an enhanced version of the FABS Act to support semiconductor research, design and manufacturing in the U.S. The signatories of the letter represent major sectors of the economy - including chips, automotive, medical devices, technology, telecommunications, manufacturing and more - as well as millions of American workers.

Amid the ongoing global chip shortage, the letter highlights the need for action on the CHIPS Act and the FABS Act to ensure greater American semiconductor production and innovation, which will strengthen the U.S. economy, national security, and long-term resiliency of the supply chain.

“Semiconductors form the nerve center of our economy, national security, and critical infrastructure. Fully funding the CHIPS Act and enacting a strengthened FABS Act will provide a critical boost to U.S. semiconductor research, design, and manufacturing, while also creating jobs and making our chip supply chain more resilient for years to come,” said John Neuffer, SIA President and CEO. “We applaud CEOs from a range of key sectors for taking action today, and we urge Congress to prioritize getting these bipartisan initiatives across the finish line this year.”

The letter is the latest in a series of calls from business leaders (including semiconductor industry leaders), U.S. governors, members of Congress, national security experts and others to support U.S. government actions to increase domestic semiconductor research, design and manufacturing, recognizing the critical role semiconductors play in America’s future.

In January, the U.S. Congress enacted the American CHIPS Act as part of the National Defense Authorization Act (NDAA) for Fiscal Year 2021. The law authorizes incentives for domestic semiconductor manufacturing and chip research investment, but funding must be provided to make these provisions a reality. On November 17, House Speaker Nancy Pelosi (D-N.Y.) and Senate Majority Leader Chuck Schumer (D-NY) announced their agreement to attend a conference on the Senate-passed American Innovation and Competitiveness Act (USICA), which includes $52 billion in funding for the CHIPS Act.

SIA also supports the semiconductor investment tax credit required by the FABS Act to supplement the manufacturing incentives and research investments in the CHIPS Act. Congress is considering separate legislation that would contain a modified version of the FABS Act to provide an investment tax credit to incentivize semiconductor manufacturing in the United States. SIA supports expanding the tax credit to cover semiconductor design and manufacturing.

Funding the CHIPS Act, along with enacting a strengthened FABS Act, are complementary efforts that will help increase the global competitiveness of the U.S. semiconductor industry.

According to a report by SIA and Boston Consulting Group (BCG), the U.S. share of global semiconductor manufacturing capacity has fallen from 37% in 1990 to 12% today. This decline is primarily due to the large number of incentives offered by the governments of our global competitors, which put the U.S. at a competitive disadvantage in attracting the construction of new semiconductor manufacturing facilities, or "fabs." In addition, federal investment in semiconductor research as a share of GDP has remained flat, while other governments have invested heavily in research programs to strengthen their own semiconductor capabilities, and the U.S.'s existing R&D tax incentives lag behind those of other countries. In addition, according to another SIA-BCG study, global semiconductor supply chain vulnerabilities have emerged in recent years that must be addressed through government investment in chip manufacturing and research.

The following is the full text of the open letter:

Dear Madam Speaker, Leader Schumer, Leader McConnell, and Leader McCarthy:

On behalf of the undersigned business leaders whose products and technologies are driving innovation and growth throughout the economy and supporting millions of American jobs, we call on Congress to expedite the Creating Helpful Incentives for the Production of Semiconductors” (CHIPS) for America Act (CHIPS) and enact an enhanced version of the “Facilitating American Built Semiconductors” (FABS), including an investment tax credit for design and manufacturing.

As you know, semiconductors are critical to nearly every sector of the economy, including aerospace, automotive, communications, clean energy, information technology, and medical devices. Unfortunately, demand for these critical components has outstripped supply, creating a global chip shortage and resulting in lost economic growth and jobs. The shortage has exposed the fragility of the semiconductor supply chain and highlighted the need to increase domestic manufacturing capabilities in the United States.

Funding the CHIPS Act and enacting the strengthened FABS Act will help address this long-term challenge by incentivizing U.S. semiconductor research, design, and manufacturing, thereby strengthening the U.S. economy, national security, supply chain resiliency, and increasing the chips that are so important to our entire economy. We ask that you prioritize taking actions to help strengthen the U.S. semiconductor ecosystem. The Senate has already approved funding for CHIPS on a bipartisan basis. The House must now proceed with approving this funding. Chip shortages pose risks to our entire economy, and time is of the essence.