Lawmakers Propose Multibillion Dollar Semiconductor R&D Push

Bipartisan legislation introduced this month aims to boost domestic semiconductor production by channeling tens of billions of dollars into R&D and workforce initiatives, tax incentives, and subsidies for fabrication facilities. Titled the Creating Helpful Incentives for Producing Semiconductors (CHIPS) for America Act , the bill’s lead sponsors are Sens. John Cornyn (R-TX) and Mark Warner (D-VA) and Reps. Doris Matsui (D-CA) and Michael McCaul (R-TX).

The legislation’s sponsors argue that increased investments in semiconductor research and manufacturing capacity are needed in the face of dependence on and increasing competition from other countries, particularly China. In a statement, Cornyn wrote, “Semiconductors underpin nearly all innovation today and are critical to U.S. communications and defense computing capabilities. While Texas has been a leader in manufacturing this technology and the U.S. leads the world in chip design, most of those chips are manufactured outside the United States.”

Bill sketches out R&D funding streams and trust funds

The CHIPS for America Act would authorize about $15 billion in total for an array of R&D initiatives. A National Semiconductor Technology Center sponsored by multiple agencies would conduct research and prototyping of advanced semiconductors in partnership with the private sector, with a recommended budget of $3 billion stretched over 10 years. An Advanced Packaging National Manufacturing Institute under the Department of Commerce would be funded at a recommended $5 billion over five years with a focus on promoting standards development, public-private partnerships, and workforce training programs.

The bill would also establish a semiconductor program at the National Institute of Standards and Technology that would support a new Manufacturing USA institute dedicated to developing advanced testing, packaging, and assembly capabilities and tools to automate semiconductor machinery maintenance. The bill recommends $30 million annually over the next five years for the institute and a further $20 million per year to support other components of the program, such as advanced metrology research.

In addition, the bill would recommend the National Science Foundation and the Department of Energy respectively receive $3 billion and $2 billion over five years for “semiconductor basic research.” It also expresses support for the Department of Defense’s ongoing Electronics Resurgence Initiative , a five year, $1.5 billion effort the Defense Advanced Research Projects Agency launched in 2017 to build collaborations between the electronics industry, university researchers, and the defense industrial base. The bill recommends the program receive a total of $2 billion through fiscal year 2025.

To coordinate research efforts, the bill directs the interagency National Science and Technology Council to develop a national semiconductor research strategy and update it every five years.

Aside from new R&D activities, the bill would provide direct support to semiconductor manufacturing companies through a mix of tax incentives and subsidies.

Starting in 2021, it would provide a tax credit for qualified semiconductor equipment or manufacturing facility expenditures that would ramp down over time until phasing out in 2027. It would also use the proceeds from tariffs to create a $10 billion trust fund administered by the Commerce Department that would provide matching grants to state and local incentives for companies to invest in domestic semiconductor manufacturing facilities.

Finally, the bill would establish a Multilateral Microelectronics Security Fund administered by the State Department that would facilitate the international “development and adoption of secure microelectronics and secure microelectronics supply chains.”

Microelectronics already a growing priority for agencies

The CHIPS for America Act’s focus on semiconductor R&D would bolster current efforts by federal science agencies to expand their footprint in the field.

Last year, the White House’s annual R&D priorities memorandum called out semiconductors as an important area for U.S. national security. The president’s latest budget request also favors microelectronics research and manufacturing, alongside emerging technologies such as quantum devices and artificial intelligence, even as it seeks significant topline cuts to science agencies.

For instance, NSF’s budget proposal included $84 million for “research to address fundamental science and engineering questions on the concepts, materials, devices, circuits, and platforms necessary to sustain progress in semiconductor and microelectronic technologies.”

DOE’s Office of Science requested an increase from $5 million to $45 million for a microelectronics initiative that it established last year in response to opportunities identified through a 2018 Basic Research Needs workshop . The initiative cuts across four of the office’s six programs and aims to “accelerate the advancement of microelectronic technologies in a co-design innovation ecosystem in which materials, chemistries, devices, systems, architectures, algorithms, and software are developed in a closely integrated fashion.”

Meanwhile, DOD has made major investments in developing supplies of trusted microelectronics for specialized military applications. For fiscal year 2021, the department requested $318 million for the Electronics Resurgence Initiative and $597 million for its Trusted and Assured Microelectronics program.

At a recent conference, Director of Defense Research and Engineering for Modernization Mark Lewis said that among all the technologies the department is currently pushing, microelectronics is now leading the pack. “We love them all the same, but our No. 1 priority, frankly, right now is microelectronics,” he remarked.