Hoping to place the US as a frontrunner in the semiconductor market, competing with the likes of China and Korea, the CHIPS Act sets aside funding for new semiconductor programmes, including $39bn for a grant programme available to semiconductor manufacturers as well as equipment and materials suppliers.
As gasworld heard last month an exclusive interview with Caroline Metcalf-Vera, Government Affairs at Electronic Fluorocarbons, the Act could also see the semiconductor supply chain benefit from $5bn of new capital.
Additionally, a 25% tax credit is included for facilities that produce semiconductors or semiconductor manufacturing equipment.
Progress for the CHIPS Act comes as the US semiconductor is witnessing unprecedented demands and strained supply chains. According to the US Department of Commerce, demand for semiconductors in the US was as much as 17% higher in 2021 than it was in 2019.
Adding to the above strains, the majority of on-stream semiconductor manufacturing facilities are operating at or above 90% utilisation, meaning there is limited additional supply to bring online without building facilities.
Taking this into consideration, in addition to further headwinds being presented as a result of the Russia-Ukraine war, support for the vital market couldn’t come at a better time.
Whilst the Act is undoubtably a huge leap for the semiconductor space, US Senator Mark Warner says there is still a lot more work to be done in order to boost US competitiveness with China.
According to a 2021 report released by SEMI, the industry association serving the global electronics design and manufacturing supply chain, the US share of the global semiconductor manufacturing capacity has eroded from 37% in 1990 to 12% today.
One of the identified reasons for this market decline is due to other countries’ government investing ambitiously in chip manufacturing incentives, while the US didn’t follow suit and therefore witnessed a steep decline in the market.
The same report also highlighted the three-quarters of the world’s chip manufacturing capacity is now concentrated in East Asia, with China projected to command the largest share of global production by 2030, due to government investments.
“It’s been more than two years since I first began sounding the alarm about the need to reduce our reliance on other nations and safeguard our national security by bringing semiconductor production back to the US,” Warner said.
“Since then, we’ve seen the consequences of semiconductor shortages all the way up the supply chain and down to consumers who have faced rising costs across goods – from vehicles to electronics.”
“While we still have a lot of work to do to boost US competitiveness with China, the Senate passage pf this legislation represents an important step in bringing back American manufacturing, shoring up US innovation and reducing costs for families.”
A statement, also released on Wednesday, by President Joe Biden supported the move as a means to lower costs, bolster the US’ competitive edge and national security – at a time when the country is looking to ‘Build Back Better’.
“Today the Senate passed a historical bill that will lower costs and create jobs,” the statement read. “As Americans are worried about the state of the economy and the cost of living, the CHIPS bill is one answer: it will accelerate the manufacturing of semiconductors in America, lowering prices on everything from cars to dishwashers.”
“It will also create jobs – good-paying jobs right here in the US. It will mean more resilient American supply chains, so we are never so reliant on foreign countries for the critical technologies that we need for American consumers and national security. I want to thank Senators in both parties for their hard work on this legislation.”
Eager to sign the CHIPS Act into law, President Biden encouraged the House to promptly pass the bill an send it to his desk. It is believed the bill will be signed into law early next week.
“These policies will strengthen semiconductor manufacturing and R&D in the US while creating thousands of high-skill jobs.”
Just last week (21st July), SEMI, the industry association serving the global electronics design and manufacturing supply chain, publicly applauded progress in the US Senate on the robust package of federal incentives for the semiconductor supply chain.
With the recent update, Ajit Manocha, President and CEO of SEMI, said, “It is crucial for the House to join the Senate in passing the investment tax credit and funding for CHIPS Act programmes in order to bolster the semiconductor supply chain in the US and keep pace with industry incentives offered by other regions.”
“These policies will strengthen semiconductor manufacturing and R&D in the US while creating thousands of high-skill jobs. Ensuring the competitiveness and resiliency of the US semiconductor ecosystem requires that semiconductor manufacturing equipment and materials providers – vital contributors to fabs – are included as eligible recipients of the incentives.”
Also welcoming the decision, John Neuffer, President and CEO of SIA, said, “Senate passage of the CHIPS Act marks decisive progress toward strengthening America’s economy, national security and leadership in the key technologies of today and tomorrow.”
“We greatly appreciate the bill’s Senate campions for advancing it, commend today’s strong bipartisan vote, and urge the House of Representatives to swiftly follow suit and send the CHIPS Act to President Biden’s desk to be signed into law. The stakes are high, and the time to act is now.”
Though the largest end-uses of helium include liquid helium for magnetic resonance imaging (MRI) manufacturing and service and gaseous helium for lifting applications (balloons, airships), helium demand for semiconductor production is expected to grow ~6% per year over the next three years from 2022 to 2024.
That’s according to analysis performed by TECHCET CA LLC, cited by Intelligas Consulting’s Maura D. Garvey in her exclusive 2022 worldwide helium market report for gasworld US Edition’s August issue (coming soon).
Helium demand for semiconductor continued to grow throughout the pandemic, and is heating up this year. Strong growth is also expected over the next several years, with plans for new fabs in the US and Europe. This has been emboldened through the aforementioned CHIPS Acts, and Garvey’s analysis notes that ‘We just need to have the helium supply to support this growth’.
That’s not the only question mark the Acts provide. According to Lita Shon-Roy, CEO of TECHCET CA LLC, “Once fully approved by Congress, the CHIPS Act will buoy up the market, allowing for further growth in the midst of recession worries. However, the question remains, ‘Will there be set asides in the CHIPS Act for materials production and R&D?’ This will be highly dependent on US policymakers and their interpretation of what is and is not needed to strengthen US’ position in semiconductor technology and manufacturing.”