Making Sure The CHIPS Act Isn’t Just Crumbs #makerbusiness

Republished By Plato

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The CHIPS act has the potential, or at least the goal of reshoring semiconductor manufacturing within the United States. This outcome is not guaranteed and much has been discussed about bolstering this policy to ensure a solid domestic manufacturing base for the future. The Carnegie Endowment for International Peace published a piece that extolls the CHIPS act, but also raises some points of caution and concern.

First, much of the discussion around CHIPS Act investments has focused on fabrication, with relatively little attention given to other stages of the manufacturing process, such as assembly, testing, and packaging. Policymakers often refer to semiconductor “manufacturing” while citing statistics that apply specifically to fabrication. The supply chain is only as secure as its least-secure link, and while the passage of the CHIPS Act is certainly helping diversify the location of fabrication, the world’s ATP facilities are also concentrated in China, Taiwan, South Korea, Japan, and a few countries in Southeast Asia. These facilities, like fabrication centers in the region, are exposed to the same wide variety of shocks, any one of which could interfere with the global supply of semiconductors. The CHIPS Act is written to allow for investments along all stages of the manufacturing process, but it does not impose any specific requirements to do so.

This is certainly something that could be overlooked and it’s important to remember how complex these supply chains are. Indeed, even beyond manufacturing the CHIPS act has the simultaneous goal of increasing U.S. labor opportunities in all areas of the manufacturing process.

To ensure that this investment in American competitiveness does not undermine other efforts to support the workers most vulnerable to technological and policy changes in the new economy, policymakers should urgently invest in and act upon research that offers ways to increase the supply of “good jobs” and provides for a pathway to economic upliftment as the manufacturing sector ceases to serve that function. Already, economists and political scientists are exploring this problem. The Commerce Department and the White House could begin by convening these and other leading scholars to hear their recommendations and begin identifying ways to integrate their recommendations into policymaking in the semiconductor and other sectors.

This seems more complicated, but with a multipronged approach there may be more chances for success. There is a lot of information and ideas for how to increase the impact of the CHIPS act in the Carnegie Endowment paper, so make sure to check out the whole thing here.