A Transfer of Global Wealth to Happen Soon? Funding for Semiconductor Manufacture in the United States

Back in May of 2021, I noted that the Endless Frontier Act, which is designed to improve the United States’ competitiveness, had been proposed in the U.S. Senate.  Since that time, the Act has been renamed the U.S. Innovation and Competition Act and passed the U.S. Senate.  The U.S. House of Representatives has also passed two laws covering parts of the U.S. Innovation and Competition Act.  A very nice article by Shelly Castle and Emily Jenkins titled “USICA and its House equivalents go to conference: what will be the likely outcome?” published in JD Supra has a very nice summary of the process of attempting to come to agreement about the contents of the ultimate law and a chart concerning where the proposed laws match up and differ.  Notably, according to the article, the House bills do not include appropriations for the CHIPs Act, which is designed to incentivize semiconductor manufacture in the United States.  There is an interesting question as to why this is happening, and I am not going to speculate.  Interestingly, in perhaps a bid to put pressure on Congress to fund the CHIPs Act, there are reports of a potential $50 billion chip manufacturing plant that may be built in North Carolina (the location of the Research Triangle).  Hopefully, Congress can get moving on this.  It is a midterm election year. 

Legislation Introduced in United States Concerning Semiconductor Manufacturing and Innovation

The Creating Helpful Incentives to Produce Semiconductors Act (CHIPS Act) has been introduced in Congress to reinvigorate U.S. chip manufacturing and innovation, particularly by pushing chip manufacturing back to the United States because of national security concerns.  Steve Blank summarizes and discusses the current situation in the United States concerning national security, China and chip manufacturing, here.  A press release sets forth the main provisions of the CHIPS Act as follows: 


The CHIPS For America Act: 

• Creates a 40-percent refundable ITC for qualified semiconductor equipment (placed in service) or any qualified semiconductor manufacturing facility investment expenditures through 2024. The ITC is reduced to 30 percent in 2025, 20 percent in 2026, and phases out in 2027. 

• Directs the Secretary of Commerce to create a $10 billion federal match program that matches state and local incentives offered to a company for the purposes of building a semiconductor foundry with advanced manufacturing capabilities.

• Creates a new NIST Semiconductor Program to support advanced manufacturing in America. The program’s funds will also support STEM workforce development, ecosystem clustering, U.S. 5G leadership, and advanced assembly and test.

• Authorizes funding for DOD to execute research, development, workforce training, test, and evaluation for programs, projects, and activities in connection with semiconductor technologies and direct the implementation of a plan to utilize Defense Production Act Title III funding to establish and enhance a domestic semiconductor production capability.

• Requires the Secretary of Commerce to complete a report within 90 days to assess the capabilities of the U.S. industrial base to support the national defense in light of the global nature of the supply chain and significant interdependencies between the U.S. industrial base and that of foreign countries as it relates to microelectronics.

• Establishes a trust fund in the amount of $750M over ten years to be allocated upon reaching an agreement with foreign government partners to participate in a consortium in order to promote consistency in policies related to microelectronics, greater transparency in microelectronic supply chains, and greater alignment in policies towards non-market economies. To incentivize multilateral participation, a common funding mechanism is established to use this fund to support the development of secure microelectronics and secure microelectronics supply chains. A report to Congress is required for each year funding is available. 

• Directs the President to establish, through the National Science and Technology Council, a Subcommittee on Semiconductor Leadership responsible for the development of a national semiconductor research strategy to ensure U.S. leadership in semiconductor technology and innovation, which is critical to American economic growth and national security, and to coordinate semiconductor research and development.

• Creates new R&D streams to ensure U.S. leadership in semiconductor technology and innovation is critical to American economic growth and national security:
• $2 billion to implement the Electronics Resurgence Initiative of the Defense Advanced Research Projects Agency.
• $3 billion to implement semiconductor basic research programs at the National Science Foundation.
• $2 billion to implement semiconductor basic research programs at the Department of Energy.
• $5 billion to establish an Advanced Packaging National Manufacturing Institute under the Department of Commerce to establish U.S. leadership in advanced microelectronic packaging and, in coordination with the private sector, to promote standards development, foster private-public partnerships, create R&D programs to advance technology, create an investment fund ($500M) to support domestic advanced microelectronic packaging ecosystem, and work with the Secretary of Labor on establishing workforce training programs and apprenticeships in advanced microelectronic packaging capabilities.

EPO Releases Annual Report on 2017 Patent Activity: Interesting Stats

The EPO has released its annual report for 2017 patenting activity.  Notably, patenting and patent filings are trending up at 3.9% and 4.4% respectively.  In the electrical engineering field, patenting is up in the audio visual space by 10.6% and semiconductors by 13.5%.  In instruments, patenting is up in optics by 15.6% and analysis of biological materials by 12.5%.  In chemistry, biotechnology is up 14.5%, but micro-structural and nanotechnology is down by 12.6%.  Interestingly, US nationals as first inventor lead patent applications in the EPO with a 26% share.  The EU member state inventors as a whole have more nationals as first inventor (47% total).  However, Germany, the leader in the EU, has a 15% share.  Japan has 13%, and China has 5%.  The top three technical fields in patent applications are 1) medical technology; 2) digital communication; and 3) computer technology.  The top ten applicant companies are: 1) Huawei (China); 2) Siemens (EU); 3) LG (Korea); 4) Samsung (Korea); 5) Qualcomm (US); 6) Royal Phillips (EU); 7) United Technologies (US); 8) Intel (US); 9) Robert Bosch (EU); and 10) Ericsson (EU).  Sixty-nine percent of the total applicants are large entities.  Twenty-four percent are SMEs/individual inventors.  Seven percent were universities/public research.  Interestingly, SMEs/individual inventors share is down from 28% in 2016.  Universities/public research is up 1 percentage point from 2016.