5 Reasons Why the US Invests Billions in the Semiconductor Industry Featured

By Gamal Khattab January 29, 2024 177

 

Direct Funding: $52.7 billion over five years

The US government is providing a significant amount of money, $52.7 billion, to support the semiconductor industry. This funding helps boost research, development, and manufacturing of microchips in the country.

Indirect Support

There are several ways the government is indirectly supporting the semiconductor industry:

Investment Tax Credits

The CHIPS Act offers a 25% investment tax credit, which could attract $150 billion in private investment over five years. This means that companies will be encouraged to invest more in chip production.

R&D Tax Credits

American chipmakers already benefit from federal tax credits for their research and development activities. This helps them innovate and create better chips.

State and Local Incentives

Many states offer additional tax breaks and subsidies to attract semiconductor companies. This makes it more appealing for these companies to set up their operations in the US.

Trade Policies

The government has implemented targeted import tariffs on foreign-made semiconductors. This indirectly supports domestic producers by making their products more competitive in the market.

Intellectual Property Protection

The government is also making efforts to protect American semiconductor intellectual property. This ensures that the innovations and designs created by US chipmakers are safeguarded.

Infrastructure and Education

Government investments are being made to create a skilled workforce and foster technological advancements in the semiconductor industry. This helps in building a strong foundation for future growth.

All these indirect support measures contribute to the overall growth and success of the semiconductor industry in the US.

5 Reasons Explain Why the USA Pays All This Money:

  1. National Security Chip: A Matter of Sovereignty

Imagine a situation where America relies on other countries for the chips that control its military hardware. That would be a scary thought, right? The US wants to avoid this nightmare scenario. Semiconductors are used in important military systems like radar and nuclear launch codes. By investing in domestic chip production, the US ensures a reliable supply chain and reduces dependence on potentially adversarial nations.

  1. Innovation Engine: Powering the Next Big Thing

Semiconductors are the building blocks of technological progress. They are crucial for advancements in artificial intelligence, quantum computing, and other cutting-edge technologies. By supporting American chipmakers, the US aims to stay ahead in these crucial breakthroughs. This helps secure economic and technological dominance in the global market.

  1. Job Creation Juggernaut: A Boon for the Workforce

The semiconductor industry is not just about fancy technology; it also creates a lot of jobs. Each chip fabrication facility can generate thousands of well-paying jobs across different skill levels. This includes engineers, technicians, construction workers, and maintenance personnel. Investing in domestic chip production leads to a stronger middle class and a more resilient economy.

  1. Countering the China Challenge: A Geopolitical Gambit

The rivalry between the US and China goes beyond trade wars and tariffs. Semiconductors have become a key battleground in this struggle for global influence. China has big plans to become a dominant chipmaker, and the US wants to maintain its edge. By supporting domestic production, the US aims to counter China's rise and prevent it from gaining a strategic advantage in critical technologies.

  1. Futureproofing the Economy: Securing Tomorrow's Prosperity

In a world that relies heavily on digital technologies, having secure access to advanced semiconductors is not just a matter of national security but also an economic necessity. Many industries, such as healthcare and automotive, depend on these chips. Ensuring a stable supply chain protects American businesses and consumers from potential disruptions and price increases. By investing in the future of chips, the US is investing in the future of its economy.