CHIPS Act Implementation Must Be About More than Just Chips

by Chris Mitchell, vice president, global government relations

Key Summary

• IPC is urging the U.S. Government to implement the CHIPS Act with a full “silicon-to-systems” strategy, not a chips-only approach
• Advanced packaging, including IC substrates and assembly/test, is essential to U.S. semiconductor leadership and needs dedicated investment
• Strengthening supply-chain partnerships is critical, ensuring chipmakers identify and collaborate with upstream and downstream U.S. electronics manufacturing partners
• High-density interconnects and PCB fabricators must be included in incentive eligibility due to their convergence with IC substrate technologies
• A skilled workforce is essential; IPC calls for investment in industry-recognized training and stackable career pathways
• Commerce is expected to release CHIPS Incentive Program funding proposals in early 2023, shaping how billions in federal funding will be deployed

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.