by Ken Schramko, senior director, North American Government Relations

The results are in from the recent U.S. federal election, and the impacts on the electronics manufacturing industry are likely to be mixed.

It’s important to emphasize that IPC is a non-partisan organization. We work with and cultivate relationships with lawmakers in both parties, seeking to share relevant information about our industry and advocate for the enactment of pro-business laws and policies. We will always continue to work with both sides.

As has been widely reported, the 2022 elections were unusual because the party in charge of the White House, which usually loses congressional seats in a midterm election, actually gained a seat in the Senate and did not experience the anticipated tsunami of defeats in the House.

That said, control of the House now shifts to the Republicans, which means new leadership of every committee and new priorities on the legislative schedule. The narrow margin of their majority means the Republicans will be challenged to keep every member in line on major votes.

In the Senate, the Democrats will continue to be in charge, but the same caveat applies about the fragility of a slim majority.  

How will the policy agenda change? In the House, Republican leaders have signaled their intention to pursue tougher oversight for various Biden administration programs, including CHIPS Act implementation, and to cut federal non-defense spending wherever possible.  House leaders also plan to create a Select Committee on China, which is sure to become an arena for debates over how to change relations with China.   

The biggest implication is that in an era of divided government, very few pieces of legislation reach enactment, and gridlock is inevitable on all but a handful of “must-do” items such as appropriations to keep the government running and the annual National Defense Authorization Act. IPC’s legislative advocacy work for the next two years is likely to be geared toward proposing language in these must-pass bills and/or generating longer-term support of our industry on both sides of the aisle.

Meanwhile, a growing portion of our attention is focused on the Executive Branch, especially the departments of Commerce and Defense, which have leading roles in policy decisions about CHIPS Act implementation and the electronics supply chain.

As always, IPC’s Government Relations Team will continue to seek opportunities to educate, inform and influence policymakers on both sides of the aisle. But the active involvement of IPC members like you makes a huge contribution to our advocacy effort. If you’re interested in politics and government policy, we invite you to learn more and plan to be involved in IPC advocacy in 2023.

by Chris Mitchell, vice president, global government relations

The U.S. Government must actively encourage the expansion of the advanced packaging ecosystem, supply-chain partnerships, and industry-backed workforce programs if it wants to succeed in boosting the U.S semiconductor industry under the CHIPS Act.

That’s the message IPC sent this week to the U.S. Department of Commerce concerning the department’s emerging CHIPS Incentive Program. The Incentive Program is at the heart of the CHIPS and Science Act, enacted in August, which authorized $52 billion in CHIPS Act funding for semiconductors, at least $2.5 billion for advanced packaging R&D, and additional measures to boost U.S. R&D.

Even in advance of the department’s request for proposals for funding – expected in early 2023 – the anticipated Incentives Program is already stimulating private sector plans to make major investments in semiconductor fabrication in the United States. To maximize the impact of the Incentive Program funding, IPC is urging the department consider the following four priorities.

• Invest in advanced packaging, including IC substrates and package assembly and test. “Advanced packaging is already overtaking silicon scaling as the leading driver for semiconductor innovation,” IPC says. “As such, the United States urgently needs to cultivate a more robust domestic advanced packaging ecosystem if it wants to maintain global leadership in semiconductor design and manufacturing.”
• Invest in supply chain partnerships. Component makers and their suppliers need to see each other as partners instead of as customers and suppliers who haggle over prices and cost-cutting. Chip component manufacturers should be required to identify their supply chain partners and the degree to which their partners support the growth of robust semiconductor and electronics manufacturing ecosystems in the U.S. and/or allied countries.
• Invest in high density interconnects. The “silicon-to-systems” mindset is especially important given the blurring of the lines between EMS manufacturers and OSATs and between PCB and IC substrate fabricators. IPC urges the Commerce Department to make PCB fabricators eligible for incentive grants given their likeness to IC substrate makers and their criticality to electronics assembly. 
• Invest in industry-recognized workforce programs. An emergent U.S. advanced packaging industry will require a skilled workforce, but this workforce should be cultivated as part of ongoing initiatives to create stackable, portable job training programs and career pathways in the electronics manufacturing industry. IPC urges the U.S. Government to better understand the existing mechanisms for workforce training in the electronics sector and to support these mechanisms through the CHIPS Incentives Program.

Having collected dozens of public comments, the CHIPS Program Office (CPO) within the National Institute of Standards and Technology (NIST), which resides within the Department of Commerce, is now preparing a request for proposals for funding under the CHIPS Act. That request is currently expected to be released in Q1 of 2023. 

Meanwhile, IPC will continue to advocate in multiple forums for a “silicon-to-systems” approach. If you would like to make your voice heard in this debate, please contact me to get involved in IPC advocacy.

by Ken Schramko, IPC senior director, North American government relations

The bipartisan CHIPS and Science Act of 2022 is launching a new era of leadership for U.S. semiconductor manufacturing and related industries. However, rebuilding the advanced electronics industry in the U.S. will require a long-term, sustained effort, and it is about more than just chips.

Chips don’t float in thin air; they must be interconnected with other pieces of hardware and software for electronic systems to work. And today’s more advanced chips require more advanced printed circuit boards (PCBs) and PCB assemblies. But alarmingly, the PCB sector has withered to near extinction in the United States. Increasing domestic chips production without bolstering the PCB sector will not improve the overall supply chain, as chips made in Arizona, California or Ohio will still need to be sent abroad for packaging and assembly into finished products, leaving the nation vulnerable to supply chain disruptions.

The United States is not only looking to build the greatest electronics components; it is trying to build the greatest electronic systems. That requires understanding the supply chain from “silicon to systems” and fixing the gaps. The U.S needs to abandon its de facto policy of regarding some segments of the electronics industry – specifically PCBs – as expendable.

H.R. 7677, the Supporting American Printed Circuit Boards Act, will begin to fix this troubling gap in the U.S. supply chain.

• Specifically, the bill provides a 25 percent tax credit for the purchase and acquisition of American-made PCBs and establishes a financial system program, modeled on the CHIPS for America Act, for American facilities manufacturing or researching PCBs. 
• This bill would spur the domestic manufacturing of PCBs by incentivizing purchases of domestically produced PCBs. 
• It also would spur industry investments in factories, equipment, workforce training, and research and development. 
• There are many small- and medium-sized enterprises (SMEs) across America that will benefit from H.R. 7677, and they will help to realize the goals of the CHIPS Act. SMEs will lead the manufacturing renaissance.

What the U.S. government needs to do:

• Enact the Supporting American Printed Circuit Boards Act (H.R. 7677), which would incentivize purchases of domestically produced PCBs and investments in factories, equipment, workforce training, and R&D. 
• Ensure that, as the CHIPS Act is being implemented, the $2.5 billion in funding for “advanced packaging” is fully leveraged to upgrade and expand the U.S. PCB and EMS sectors. 
• Issue a Presidential Determination on PCBs and IC substrates, pursuant to Section 303 of the Defense Production Act, to address industrial base vulnerability to safeguard the nation’s defense and technological leadership. 
• Develop new public-private R&D opportunities, including a National Manufacturing Institute for Interconnection. 
• Identify electronics manufacturing as a vital economic and security priority of the U.S. Government, and pursue a strategy aimed at revitalizing all segments of the industry.

U.S. government and industry reports confirm it

In February 2022, the U.S. departments of Commerce and Homeland Security released an Assessment of the Critical Supply Chains Supporting the U.S. Information and Communications Technology Industry, including this key finding: “Current State of ICT Manufacturing and Related Challenges: The United States continues to lead in ICT development and innovation in many product categories. However, the production of many products such as printed circuit boards (PCBs) and displays has become increasingly concentrated in China, along with electronics assemblies.”

The report urges greater federal support of the domestic PCB sector: 

• “Revitalize the U.S. ICT Manufacturing Base: Support domestic investment and production of key ICT products, potentially including printed circuit boards (PCBs) and semiconductors, through appropriate federal procurement incentives and funding of programs like Title III of the Defense Production Act and the [CHIPS for America Act].”
• “Build Resilience through Secure and Transparent Supply Chains: Promote supply chain risk management practices through procurement and monitoring efforts such as implementing an Assured Supplier Program for PCBs for Federal Government and establishing a Critical Supply Chain Resilience Program at the Department of Commerce.” 
• “Continue to Study the ICT Industrial Base: Conduct further industrial base studies on critical ICT products such as PCBs and related microelectronics … to guide long-term policy planning.”

A recent report by IPC found that since 2000, the nation’s share of global PCB production has fallen from over 30 percent to just 4 percent, with China now accounting for around 50 percent. Only four of the top 20 electronics manufacturing services (EMS) companies are based in the United States, and any loss of access to non-domestic sources of PCBs would be catastrophic. Reports by the U.S. Department of Commerce in 2018 and 2022 confirm these risks.