A comprehensive 2022 law would significantly boost semiconductor output in the US, which President Joe Bidenas has hailed as a means of reviving American semiconductor industry and lowering the nation’s dependency on imported computer chips. But according to a report released Wednesday by a Washington-based economic think tank, it will do so at a high expense and might not provide the best value.
The $280 billion CHIPS and Science Act, according to researchers at the Peterson Institute for International Economics, will generate roughly 43,000 permanent jobs as chip manufacturing reopen in the US and 93,000 construction jobs as they expand. However, the Peterson analysis concluded that each job generated will cost taxpayers around $185,000 year due to government subsidies supporting the anticipated increase in chip manufacture.
Although the research acknowledges that there is significant compensation variety within the industry, it states that this is twice the average yearly wage of U.S. semiconductor employees. According to state data, the average salary in Oregon’s semiconductor business is $150,000 per year.
Two projects in Oregon are being funded by the CHIPS Act: $1.9 billion for the continuous renovation of Intel’s research facilities in Hillsboro and $53 million for the study and production of microfluidics at HP’s Corvallis site.
The Peterson study points out that Congress overlooked other options for allocating billions of dollars to guarantee the United States had sufficient supplies of chips when it passed the CHIPS Act. Other alternatives would have included establishing a Federal Emergency Management Agency-run chip stockpile or offering financial incentives to overseas chip manufacturers and U.S. chip consumers to maintain larger semiconductor stockpiles in the United States.
After COVID-19 lockdowns caused a shortage of semiconductor supplies, Biden praised and Congress passed the CHIPS Act. Automobile and other goods manufacture was hindered by the shortages. Increasing the manufacturing of chips created in America was also seen by the Biden administration as a national security problem since it would lessen the United States’ need on foreign imports of chips, which are utilized by both private businesses and the military.
America’s share of global chip production capacity, as determined by volume rather than monetary value, decreased from 37% in 1990 to just 10% in 2022, according to a study conducted by the Semiconductor Industry Association and the Boston Consulting Group.
U.S. industry relies heavily on semiconductors made in Taiwan, a supply that might be jeopardized if China initiates military strikes aimed at forcing the autonomous island to politically reunite with the Chinese mainland, alarming policymakers. Large investments are being made in semiconductor factories in Arizona by the massive Taiwan Semiconductor Manufacturing Co., which supplies chips to companies like Apple and Qualcomm.
Additionally, the CHIPS Act seeks to increase the United States’ share of the world’s sophisticated chips from zero at present to 20% by 2030. However, the Peterson report contended that making such a leap would necessitate more government funding as well as resolving the skilled labor and electrical constraints. It further mentioned that in order to maintain their market dominance, Taiwan and South Korea are providing their own chip manufacturing behemoths with substantial tax breaks. The Peterson researchers come to the conclusion that the United States might be able to reach that 20% target.
It is unknown if the CHIPS Act will be repealed or modified under the upcoming Trump administration. President-elect Donald Trump had claimed during the election campaign that bringing semiconductor facilities to the US would have been more effective if tariffs on foreign chips had been implemented rather than incentives to promote American manufacturing.
However, the Peterson researchers pointed out that European Union tariffs had not previously succeeded in bringing back semiconductor manufacturing in Europe. They wrote that there is no strong evidence that the United States would be better off with a similar tariff.
— The Associated Press’s Paul Wiseman
