THE CHIPS AND SCIENCE ACT: A HUGE BOOST FOR DOMESTIC MANUFACTURING
The looming semiconductor chip shortage shows why domestic manufacturing is needed in the United States.
The recently signed CHIPS and Science Act is promising to massively support domestic chip production while easing the backlog built up from companies and consumers. This will mean more manufacturing jobs, increased semiconductor availability, and less dependence on foreign chip production.
President Biden signed the bipartisan Bill that will pump $280 billion into high-tech manufacturing and scientific research, including over $50 billion towards research and manufacturing of semiconductor chips in the US. $39 billion will be used to expand semiconductor manufacturing over the next five years and provide companies with incentives to build, expand and modernize US facilities and equipment. In addition, a 25% tax credit will be given to companies that invest in semiconductor manufacturing equipment or the construction of manufacturing facilities. Nearly $13 billion will go towards STEM education for high schools, community colleges and universities. This enormous package will not
only give domestic manufacturing a big boost, but it invest in STEM education to bolster the talent pool which will be needed to support the growing industry.
SEMICONDUCTORS NEEDED FOR COUNTLESS PRODUCTS
Many key US industries require products made with semiconductor chips. Semiconductor chips are used in a wide range of products from vehicles to medical devices and consumer products. This historic Bill encourages manufacturers to produce chips domestically rather than entirely rely on foreign production. The nation found out the hard way that this industry relied too heavily on other countries. It was clear the damage this can cause after experiencing the chip shortage caused by COVID-19. With an increase in domestic chip production, more semiconductor enabled products including computers, phones, ATMs, MRI machines, and even manufacturing equipment will be readily available to ensure consumers have access to the products they need, and the nation can stand on its own. The US is among the top semiconductor chip manufacturers in the world; however, the total quantity of chips produced is only a fraction of what the top countries, Taiwan and China produce.
The US currently accounts for only 10% of global production. Whereas 24% of the advanced chips are made in China, 21% in Taiwan and 19% in South Korea with the number expected to rise significantly within the next three years in Asia.
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By increasing domestic production, it makes the US less reliant on foreign countries while easing concerns of national security. US manufacturers will no longer be constrained by supply chain bottlenecks holding up production of many hightech products caused by the COVID pandemic lockdowns in other countries if it becomes self-sustaining. Taiwan Semiconductor Manufacturing Co. controls more than half of the world’s market. New Jersey can instead become an industry leader. The Garden State is home to semiconductor technology manufacturers including Sarnoff Corporation, Toshiba America Electronic Components, Inc. and Hybrid- Tek. The CHIPS Bill would allow for more companies to produce domestically while increasing employment opportunities to many US residents here in New Jersey and nationwide.
A LONG ROAD TO PROGRESS
The CHIPS Act has been in the works for a while but has finally received the greenlight and plenty of bipartisan support spearheaded by New Jersey’s legislators such as US Senators Bob Menendez and Cory Booker. According to the US State Department, the passage of the Bill strengthens US industries’ future, bolsters the domestic supply chain, and helps ensure America becomes a global leader in science and technology.
One of the provisions in the Bill establishes the implementation of a National Supply Chain Database, which was co-developed and initiated by Sen. Menendez and the New Jersey Manufacturing Extension Program (NJMEP).
Having a National Supply Chain Database will minimize future US supply chain disruptions by highlighting domestic manufacturing capabilities and their ability to retool in critical areas to meet product demand. There is a need to have such an extensive and centralized database and the National Supply Chain Database addresses these concerns.
The CHIPS Act encourages more individuals to explore and pursue manufacturing careers through apprenticeships and STEM education. Part of this Bill will focus on workforce training opportunities. Billions will go towards workforce development to ensure there’s an adequate workforce who’s qualified to support semiconductor chip manufacturing. In addition, the $13 billion that’s going towards STEM education includes scholarships and fellowships which will strengthen the workforce to support the industry.
Federal funding provided to workforce development programs such as NJMEP will benefit small and medium-sized manufacturers to better prepare workers to support semiconductor chip production. Businesses will now have the support needed to adopt new technology and strengthen their own supply chain, according to an NJBIZ article. Now that this key piece of legislation has been signed, manufacturing has a promising future, more workforce development opportunities will be available, and most importantly, less supply chain interruptions compared to what we’re currently facing.