Chipmakers and Big Tech firms form coalition to push for government chip sector support

Last week, several leading microchip industry participants and Big Tech corporations formed a group called the Semiconductors in America Coalition (SIAC). Its purpose is to advocate for federal policies that will bolster electronic components research and manufacturing in the United States.

As its first order of business, the organization asked Congress to spend $50 billion on domestic chip sector development.

SIAC’s Goals and Members

The SIAC's current priority is supporting the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act.

Introduced in mid-2020, the bipartisan bill earmarked $22 billion in federal funding for domestic component industry growth initiatives. Congress enacted the legislation but has not authorized its funding. Last month, the White House called on federal lawmakers to invest $50 billion into the CHIPS Act as part of the American Jobs Plan.

The SIAC sent an open letter to leaders representing both branches of Congress outlining its position last Tuesday.

The alliance stressed the importance of providing the semiconductor sector with financial support in light of the global chip shortage. The coalition agrees with industry analysts that the widespread imbalance between supply and demand will not be resolved quickly. It also asserts that more production capacity will prevent debilitating bottlenecks from arising in the future.

The SIAC believes the U.S. government can best support the worldwide semiconductor supply chain by funding the CHIPS Act.

The coalition counts a host of leading chipmakers, including AMD, Intel, Nvidia, Qualcomm, and Texas Instruments, as members. ASML, Synopsys, Applied Materials, and II-VI Incorporated, vendors of electronic component manufacturing equipment and software, are part of the group. Amazon Web Services, Apple, Google, Microsoft, and Verizon also support its objectives as major downstream chip purchasers.

A Viable Path Forward?

The U.S.-China trade war, COVID-19, and global part shortage have caused unprecedented disruption within the electronic components ecosystem. The SIAC’s proposal indicates government intervention would bring greater stability to the worldwide supply chain. But it is worth considering whether its plan offers a viable path forward.

Because semiconductor manufacturing technology has become incredibly sophisticated, launching a new chip manufacturing plant can be a multibillion-dollar project. At the beginning of the 21st century, it cost $2 billion to establish a leading-edge electronic components factory. Today, companies need to spend between $10 billion to $20 billion to establish a state-of-the-art fab.

With figures like that, only large multinational corporations and governments have the resources to avert parts shortages through expanded capacity.

The SIAC believes the U.S. should take an active role in reshaping the worldwide microelectronics sector. It cited a recent study conducted by the Semiconductor Industry Association and the Boston Consulting Group to support its case. The report found government-sponsored incentive programs could effectively address the global supply chain’s current vulnerabilities.

Similarly, Accenture recently described public-private collaborations as a “prudent choice” for semiconductor industry participants in the post-chip crisis landscape.

In addition, cultivating greater semiconductor independence has become a priority in China, South Korea, Taiwan, and the European Union in the last few years. Those regions have allocated billions of dollars to support their respective electronic parts supply chains recently.

With all that in mind, Congress following the SIAC’s recommendation to fund the CHIPS Act seems like a smart move.

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