Electronics Manufacturers Seek $50B in Federal Aid

Semiconductor makers said the funding could reverse decades of declining domestic manufacturing.

The U.S. semiconductor industry includes some of the world’s most prominent tech companies, from Intel and Qualcomm to IBM and Texas Instruments.

But the trade group representing that sector this week warned that domestic semiconductor production has gradually been on the decline for decades — and said tens of billions of dollars would be needed to reverse course.

As the coronavirus pandemic highlighted the fragility of global supply chains this spring, the semiconductors that power the world’s electronics, in particular, caught the attention of policymakers in Washington.

The Semiconductor Industry Association on Wednesday issued a study with the Boston Consulting Group that found that although companies headquartered in the U.S. account for nearly half of the world’s chip sales, just 12% of those chips are produced across the 70 semiconductor fab plants in the U.S.

The group attributed the trend to generous subsidies offered by overseas governments, which make semiconductor fabrication facilities roughly 30% more expensive in the U.S. than in Singapore, South Korea or Taiwan — and up to 50% more expensive than in China.

The SIA, however, said $50 billion in federal manufacturing grants and tax relief for the industry over the next decade could help build 19 new fabrication plants and make the U.S. the most attractive place to produce chips outside China. The report also found that the money would help the U.S. capture nearly 25% of the new semiconductor capacity expected to come online over that span; without it, the group projects the U.S. would net just 6%.

Government money going to massive tech companies raises some obvious political concerns — particularly in the midst of a pandemic and worldwide recession — but the group said it would create up to 70,000 high-paying jobs, not to mention help the U.S. compete in emerging technologies such as 5G communications, artificial intelligence and quantum computing.

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