Opinion

Bold Federal Investments in Semiconductor Technology Needed to Grow U.S. Economy and Create Jobs of the Future

To reinforce U.S. leadership in the technologies critical to innovation, jobs, national security, and our resilience to future crises, policymakers must prioritize the bedrock of modern technology — semiconductors. Through bold investment in domestic semiconductor manufacturing incentives and research initiatives, the U.S. can create hundreds of thousands of new jobs and boost semiconductor and other technological innovation to sustain and advance U.S. leadership.

Semiconductors are the brains of phones, cars, ventilators and modern factories. During the pandemic, semiconductor-enabled technologies have allowed Americans to stay connected and productive, helped health care professionals treat illness, assisted scientists in developing life-saving vaccines and therapeutics and enabled children to learn remotely. Meanwhile, fluctuations in demand brought on by the pandemic have contributed to global semiconductor shortages affecting a range of sectors. Looking to the future, semiconductors are at the core of emerging technologies — such as 5G, autonomous vehicles, artificial intelligence and other tools of the future — that will determine whether America maintains its global technology and economic leadership.

Ever since the invention of the first integrated circuit six decades ago, the United States has led the world in semiconductor technology, which now accounts for a large and critical part of the American economy. Semiconductors are America’s fourth-largest export, with the U.S. semiconductor industry accounting for nearly half of global semiconductor market share. The semiconductor industry employs nearly a quarter of a million people in the United States while supporting more than 1 million more U.S. jobs.

But troubling trends have held back U.S. semiconductor manufacturing and research, threatening to slow American innovation. Congress and the Biden administration can act now to reverse these trends. A coalition of leaders in the tech, auto and medical device sectors, as well as broader business and manufacturing groups, have asked leaders in Washington to invest boldly in domestic chip manufacturing and research.

U.S. semiconductor manufacturing leadership has eroded from nearly 40 percent of global capacity 30 years ago to just over 10 percent now, largely due to the lack of federal incentives for domestic production. In contrast, bold government investments by other countries in semiconductor manufacturing have increasingly led to advanced chip manufacturing flourishing outside the United States. The shrinking U.S. semiconductor manufacturing base has implications for American workers and our economy as a whole. It means fewer high-tech manufacturing jobs and undermines America’s ability to out-innovate overseas competitors.

Adding to this challenge is the need for greater federal investment in semiconductor research. By speeding innovation in semiconductors and the countless technologies they enable, federal investment in chip research would give a big boost to the U.S. economy and an outsized return on investment for U.S. taxpayers. Each additional dollar invested by the federal government in semiconductor research adds $16.50 to U.S. gross domestic product. Unfortunately, federal investment in chip research has been flat as a share of GDP for years.

Newly enacted measures in annual defense legislation, the National Defense Authorization Act, creates a historic opportunity to usher in a new era of American manufacturing and technology leadership. The annual defense bill authorizes federal incentives to promote semiconductor manufacturing and federal investments in semiconductor research, but the new law does not fund these provisions.

Congress should fully fund the semiconductor manufacturing and research provisions in the NDAA to help the United States run faster, maintain leadership in technologies critical to defense and infrastructure and create the jobs of the future in an industry essential to innovation. It’s a once-in-a-generation opportunity, and leaders in Washington should seize it.

 

Bob Bruggeworth is President and CEO of the semiconductor company Qorvo and chair of the Semiconductor Industry Association’s board of directors.

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