The industry started witnessing a shortage in semiconductors for the first time since 2020 when demand for electronic items increased during the spring of that year. In fact, chipset purchases and production have been decreased by several customers as the deadly virus started moving across the planet. In the meantime, chipmakers saw the massive demand for semiconductors in other sectors. According to the experts, the industry worked intelligently to meet the demand during harsh times. First, the semiconductor industry worked hard to keep operations running globally, especially during the start of the pandemic in Spring 2020 when many foreign and state governments imposed lockdown orders on businesses. The semiconductor industry worked to classify its operations as “essential” so they could continue operations. Other than this, what the industry felt is that utilization of a huge number of FABs will help augment the chip output and aid the sector to tackle the challenges of escalating demand. In this regard, we spoke exclusively to Robert Casanova, Semiconductor Industry Association (SIA) Director of Industry Statistics and Economic Policy about the objectives of this international association, how it is constantly helping transform the semiconductor industry, and the way it assisted the global chipmakers during the lockdown with its unique strategies.
Q. Can you please highlight in detail why SIA was formed? What are your mission and vision?
Since 1977, the Semiconductor Industry Association (SIA) has been the voice of the U.S. semiconductor industry, one of America’s top export industries, and a key driver of America’s economic strength, national security, and global competitiveness. SIA’s mission is to strengthen U.S. leadership in semiconductor manufacturing, design, and research by working with Congress, the Administration, and key industry stakeholders to encourage policies and regulations that fuel innovation, propel business, and drive international competition.
SIA advocates and organizes industry action on:
- Defining strategies to promote and maintain world leadership in technology for our members
- Advocating for public policies that provide a fair field for competition
- Promoting fair and open trade
- Tracking and distributing statistical information on market trends
Q. The US is home to many global semiconductor manufacturing firms such as Intel, NXP, Texas Instruments, and fabless like Qualcomm. In this regard, what are the various current challenges you think the region is facing amid the pandemic? What are the various steps required by the companies to ease the situation?
The share of modern semiconductor manufacturing capacity located in the U.S. has decreased from 37% in 1990 to 12% today. This decline is largely due to substantial manufacturing incentives offered by the governments of our global competitors, placing the U.S. at a competitive disadvantage in attracting new construction of semiconductor manufacturing facilities, or “fabs.” Additionally, federal investment in semiconductor research has been flat as a share of GDP, while other governments have invested substantially in research initiatives to strengthen their own semiconductor capabilities, and existing U.S. tax incentives for R&D lag behind those of other countries. Furthermore, global semiconductor supply chain vulnerabilities have emerged in recent years that must be addressed through government investments in chip manufacturing and research.
Q. The semiconductor industry is surrounded by several challenges in terms of production and is not being able to meet the demand of the electronics and automobile industry. So, what are the current challenges now involved in the sector? How SIA as one of the leading semiconductor associations is tackling these challenges and helping the industry to grow again?
The ongoing global chip shortage – caused by continued high demand across all sectors and supply chain shocks caused by the pandemic – is a major challenge faced by the industry. To limit the supply and demand mismatch, the semiconductor industry has in the short term substantially expanded shipments by increasing the utilization of existing manufacturing capacity. To meet increased chip demand over the long term, more semiconductor manufacturing facilities, called fabs, must be built. By funding the CHIPS Act legislation and expanding and enacting the FABS Act, leaders in Washington can usher in a historic resurgence of chip manufacturing in America, strengthen our country’s most critical industries, boost domestic chip research and design, and help ensure the U.S. leads in the crucial, chip-enabled technologies that will define America’s strength for decades to come. To promote transparency and a better understanding of the semiconductor supply chain, SIA launched the Semiconductor Monthly Unit Sales Dashboard. Given the attention on the supply of semiconductors and the supply chain disruptions facing broad sectors of the economy, the data is intended to provide information to industry, government stakeholders, and the public at large on unit sales of semiconductors.
Q. Can you please highlight some current major policies of the US government to boost the growth of the semiconductor industry in the country and what are your milestones?
Recognizing the critical role semiconductors play in America’s future, Congress in January enacted the CHIPS for America Act as part of the FY 2021 National Defense Authorization Act (NDAA). The law authorized incentives for domestic semiconductor manufacturing and investments in chip research, but funding must be provided to make these provisions a reality. Funding the CHIPS Act, along with the enactment of a strengthened FABS Act, are complementary efforts and will help enhance the global competitiveness of the U.S. semiconductor industry.
One of our biggest milestones in 2021 is the authorization of the CHIPS Act that we helped to advance. It secured the enactment of legislation authorizing the chips for America Act, an important first step to securing investments in domestic semiconductors manufacturing and research. The other milestone is our response to COVID-19 in 2020 when we ensured the industry was allowed to continue operating as governments around the world implemented closures and other important restrictions to reduce the pace of the virus.
Q. Do you think the Chips for America act would strengthen US semiconductor manufacturing? How do you think it could be a game-changer in terms of innovation?
A $52 billion federal investment in semiconductor production and innovation will spur hundreds of billions of dollars in company investments, create hundreds of thousands of U.S. jobs, and usher in a historic resurgence of chip manufacturing in America. The U.S. must level the global playing field, strengthen America’s future, and help our country avert the next chip shortage by enacting bold investments in semiconductors.
Q. Finally, can you please highlight your roadmap for the coming five years?
To ensure continued U.S. leadership in the global semiconductor industry, the U.S. must adopt an ambitious competitiveness and innovation agenda.
1. Invest in U.S. Semiconductor Leadership:
- Fund the domestic semiconductor manufacturing, research, and design provisions in the CHIPS for America Act.
- Enact an investment tax credit encompassing both manufacturing and design to spur the construction of new onshore advanced semiconductor research, design, and manufacturing facilities and to promote domestic chip innovation.
2. Strengthen America’s Technology Workforce:
- Implement a national strategy — backed by appropriate investments and in consultation with education leaders and the private sector — to improve
- our education system and increase the number of Americans graduating in STEM fields.
- Reform America’s high-skilled immigration system to enable access to, and retention of, the best and brightest in the world.
3. Promote Free Trade and Protect IP:
- Approve and modernize free trade agreements that remove market barriers, protect IP, and enable fair competition.
- Expand the Information Technology Agreement, one of the World Trade Organization’s most successful free trade agreements.
4. Cooperate Closely with Like-Minded Economies:
- Recognizing the global nature of the semiconductor industry, expand collaboration with like-minded allies on shaping a regulatory and legal environment more conducive to growth, innovation, and supply chain resilience in such areas as regulatory coherence, standards, and export controls.
- By implementing these policies, Congress and the Administration can take key steps to protect American leadership in semiconductor technology and win the global competition for the technologies of the future.