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It’s Time to Invest in American Tech Leadership

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Al Thompson, Vice President of U.S. Government Relations, IntelAl Thompson, Vice President of U.S. Government Relations, IntelBy Al Thompson, Vice President of U.S. Government Relations, Intel

“Microelectronics are critical to how we live and work,” Ranking Member Frank Lucas (R-OK) said at a House Committee on Science, Space and Technology hearing December 2. “They are not only essential to our economic security but our national security as well. To lead in advanced microelectronics, the United States will need to make strategic investments along the entire innovation pipeline.”

The hearing featured four expert witnesses, including Intel’s Dr. Ann Kelleher, Executive Vice President and General Manager of Technology Development, who discussed the status of advanced semiconductor manufacturing in the U.S. and how to ensure continued national leadership in the microelectronics industry.

Ann highlighted how semiconductors have become increasingly important to American technology leadership, our economy, and national security, adding that the U.S. has lost a significant share of chip production to East Asia over the last 30 years. That share has dropped from 37 percent in 1990 to 12 percent today and is projected to erode even further to just 9 percent by 2030. “Investments by semiconductor manufacturers to increase U.S.-based production are critical to solving this problem, but more needs to be done to promote a robust chip manufacturing industry.” she told the committee.

“Demand for semiconductors is at an all-time high,” Rep. Brian Babin (R-TX) reinforced. “They continue to play a critical role in our country and investing in this industry should be a high priority for us.”

Adding further support, Ann noted that a Boston Consulting Group (BCG) recently identified the two most significant issues facing the U.S. in this area: the 30% cost disadvantage for American chipmakers to manufacture in the U.S. and the lack of federal funding for R&D, which lags behind both Taiwan and Korea. This cost difference is a direct result of countries in Asia providing substantial incentives to build up their domestic semiconductor companies

On top of that, 40 years ago, U.S. federal investment in semiconductor R&D was $1 billion, more than double that of private investment at $0.4 billion. Today, private investment is nearly $40 billion, vastly exceeding the federal government’s investments of $1.7 billion in semiconductor-specific R&D and $4.3 billion in research in related fields, according to the Semiconductor Industry Association (SIA).

There was general agreement that federal support and investment for both R&D and manufacturing are urgently needed to reverse the decline in chip production, level the playing field for American companies, and maintain a world-leading semiconductor industry here in the U.S. The CHIPS for America Act, passed by the Senate in June as part of the U.S. Innovation and Competition Act (S. 1260), offers a vital course correction.

“The CHIPS Act would make substantial investments in the future of semiconductor R&D. The act also includes incentives to bring semiconductor manufacturing back to our shores,” Chairwoman Eddie Bernice Johnson (D-TX) explained. “I support full funding for the CHIPS Act.”

 “It’s clear that we need to swiftly provide funding through the CHIPS Act to help reinvigorate our nation’s semiconductor industry,” Rep. Suzanne Bonamici (D-OR) emphasized.

We are encouraged to see the Committee support this critical legislation and echo backing from the Problem Solvers Caucus, multiple state governors and Commerce Secretary Gina Raimondo. Bipartisan congressional action now to secure this funding would grow the U.S. semiconductor manufacturing base and advance an issue that has strong public support. CEO Pat Gelsinger recently joined other senior executives from SIA member companies in a letter calling on Congress to prioritize the CHIPS Act – which we urge them to do before the end of the year.

At Intel, we’re doing our part to invest in American leadership with a $20 billion investment in our operations in Arizona and $3.5 billion in New Mexico. We look forward to partnering with the federal government under the CHIPS Act to enhance domestic semiconductor R&D and manufacturing, which will, in turn, enhance the nation’s economy and security.