Key Summary

• President Biden’s FY22 “skinny budget” highlights major proposed increases for workforce training, manufacturing, and R&D
• The plan expands funding for Registered Apprenticeships and broader workforce development
• Manufacturing programs at NIST and the Manufacturing Extension Partnership would see significant funding boosts
• The proposal includes historic increases in federal R&D support across multiple science agencies
• Infrastructure investments aim to modernize transportation, advance climate goals, and strengthen economic opportunities

Last week, U.S. President Joe Biden released what is known as the “skinny budget” that gives topline dollar amounts for the president’s proposed discretionary funding for fiscal year 2022. The overview document does not dive into specific program spending amounts, but it does highlight the administration’s budget priorities, including increased funding for workforce training, manufacturing, and R&D programs that are relevant to our industry.

Here are a few excerpts:

• Invest in high-quality workforce training programs: The budget “proposes significant new investments to build a strong workforce by expanding funding to support Registered Apprenticeships, while also investing in other key workforce programs to ensure that businesses have the skilled and diverse workforce they need, and workers have multiple pathways to the middle class.”
• Ensure the future is "Made in America": The budget would more than double last year’s funding level for National Institute of Science and Technology manufacturing programs and nearly double the funding for the Manufacturing Extension Partnership.
• Renew America’s commitment to R&D: The package proposes “historic increases in funding for foundational research and development across a range of scientific agencies, including NSF, NASA, NIST, DOE, and others to help spur innovation across the economy and renew America’s global leadership.”  
• Invest in a 21st century infrastructure: The plan calls for “investments that set the stage for an ambitious, comprehensive reform and investment strategy to build back better America’s highway, transit, and rail systems nationwide; make historic investment in safety, equity, and climate change mitigation; and foster neighborhood-oriented investments that transform America’s infrastructure, reconnect communities, and provide opportunities to all Americans.”

IPC will review the President’s more detailed FY22 budget request when it is available later this spring. For now, we are pleased to see another step forward on the path to boosting U.S. government support of manufacturing.

Key Summary

• New IPC study shows electronics manufacturing will help drive Europe’s economic recovery
• Electronics manufacturing directly impacts €3.8 trillion of European GDP and produced €301 billion in value in 2019
• EU holds only 5 percent of global PCB production and 10 percent of EMS capacity
• Study urges a holistic policy approach and investment across the full electronics value chain
• Recommendations include factory modernization, workforce training, and supporting embedded electronics leadership

A new IPC study, Digital Directions, Greener Connections, finds the electronics manufacturing industry has largely withstood the negative effects of the COVID pandemic and is poised to help drive Europe’s economic recovery and resilience, especially if anticipated government decisions take a supportive approach.

The study highlights the importance of electronic systems, especially those embedded into end user-electronics from industrial robots to an Airbus A350 to 5G infrastructures, as a main driver of global GDP growth. It forecasts the industry's global compound annual growth rate at 3.7 percent per year for the 2018-2023 period while the World Bank forecasts overall global growth of 1.8 percent over the same period. As Europe transitions to a digital and green economy, its electronics manufacturers are poised for robust growth following many years of declining global market share.

The study, conducted by Decision Etudes & Conseil and commissioned by IPC, a global electronics manufacturing association, includes a detailed analysis of Europe's strengths and challenges in this critically important sector and government policy recommendations to boost the resilience and competitiveness of the industry in Europe.

Although the pandemic shattered many industries, the data shows the electronics manufacturing industry will be a key sector responsible for driving European's economic recovery and meeting future market needs. For critical mission sectors – transportation, industrial equipment, aerospace and defense, IT and telecommunications, and healthcare – to rebound from the pandemic and build towards the future they'll need government policies that strengthen the resiliency of the electronics manufacturing industry as a whole.

The study highlights the electronics manufacturing industry accounted for €301 billion in production value in 2019 and directly impacted €3.8 trillion in European GDP. It reveals that today, however, the EU accounts for only around 5 percent of the overall global production of printed circuit boards (PCBs) and 10 percent of electronics manufacturing services (EMS), key elements of the electronics manufacturing ecosystem.

The study comes as crucial decisions are being made at the European Commission (EC), which is releasing a revised industrial policy strategy later this month; and in national capitals, where COVID-recovery plans are being developed for potential financial support from the EC. Momentum also is building to invest in next-generation processors and semiconductor technologies. The European Union's Recovery and Resilience Facility will make €672.5 billion in loans and grants available to support reforms and investments undertaken by Member States, with 20 percent of the funding dedicated to foster the digital transition. Member States are set to submit their plans for spending by the end of the month.

This report makes a powerful argument for a holistic policy approach to the electronics manufacturing industry as the EU seeks to revive economic growth and further its digital and green transitions. There is now a series of opportunities to align policies, partnerships and investments to achieve these ends.

To support the electronics manufacturing industry, the report offers a series of recommendations including:

• Recognize electronics manufacturing as a strategically important industry and invest in neglected parts of the value chain. While semiconductors and microelectronics' strategic importance is generally well recognised, the report notes that progress also depends on investments in the manufacturing of PCBs and electronic board assemblies. When governments invest in microelectronics, there should be gap analyses to assess corresponding needs in PCB fabrication and assembly. These sectors also should benefit from dedicated funding initiatives, such as the Recovery and Resiliency Funds.
• Support European manufacturers in their transition to factories of the future, strengthening the industry and promoting digital transformation. As most European PCB and EMS companies are small and medium-sized enterprises, they particularly need support for investments in R&D, equipment upgrades, and workforce training to create the more connected, efficient factories of the future.
• Enhance vocational training and lifelong training. The European Microelectronics Pact for Skills, launched in 2020, aims for an overall public and private investment of €2 billion to upskill and reskill more than 250,000 workers and students by 2025. Here again, the report recommends including PCB makers and assemblers in those programs, and it suggests that Member States' recovery plans should include projects dedicated to upskilling workforce in Industry 4.0 tools and technologies, paying special attention to small and medium-sized enterprises.
• Focus on Europe's leadership in embedded electronics – which account for 85 percent of its electronics output – to help achieve successful green and digital transitions. Supporting these end-user sectors will help drive overall growth and bring about cleaner, more connected, autonomous vehicles and more intelligent, secure, and efficient homes, factories, and healthcare systems.

In defining the European concept of "open strategic autonomy," strike a careful balance between support for regionalized production and a flexible global supply chain. This includes working with like-minded partners at the multilateral and bilateral levels to enforce trade rules and avoid creating new trade barriers. 

If you have any questions regarding the study, please contact me at AlisonJames@ipc.org. 

By Fanyu Zhang, Environmental Fellow for IPC in Beijing, China; Kelly Scanlon, IPC Director of Environmental Policy and Research

Key Summary

• IPC Asia members are most concerned about regulations on toxic substances
• REACH and RoHS style regulations are the highest priority for surveyed companies
• EU and U.S. environmental policies are of greatest interest to Asia based respondents
• Members say regulatory developments in the EU and U.S. influence global regulatory trends
• Most participants actively follow environmental regulatory news through IPC and online sources
• Survey responses reflect broad concern across the electronics supply chain

IPC Asia members are concerned about a variety of government regulations on environmental, health, and safety (EHS) issues, but especially those involving toxic substances and originating from the United States and Europe. 

Those are the key results of an IPC survey conducted in February 2021 among IPC Asia members, in which we sought to learn more about their interests in EHS regulations. We received feedback from 121 members, primarily in mainland China, Taiwan, and Hong Kong, plus a few from Japan, Thailand, and Vietnam. The responses came from members representing the full electronics manufacturing supply chain including board fabricators and manufacturers, EMS/assembly/ODM and contract manufacturers, suppliers, and OEMs.

The environmental policies that interest survey participants most are those regulating the use of toxic substances. Sixty-six percent said they are most interested in any regulations modeled on the European Union’s Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) directive; and 48% said they are concerned about rules like the EU’s Restriction of Hazardous Substances (RoHS) directive. Several participants mentioned that adhering to REACH- and RoHS-style regulations in Asia will impact their business greatly. Twenty-one percent were interested in chemical storage and transportation regulations; and a collective 25 percent mentioned a range of other regulations affecting halogen, lead, and volatile organic chemicals (VOCs); solid waste management; and occupational health and safety.

The specific regions in which environmental policies and regulations are of most interest to IPC Asia members are the EU (59 percent) and the U.S. (44 percent). Other than these two regions, survey respondents mentioned Japan (17%), Canada (5%), and all others (12%), including Mexico and various Middle Eastern and other Asian countries.

It is interesting but perhaps not surprising that the European and American regulations are of greatest concern to our members. These regions’ regulatory practices influence the regulatory approaches of many other countries.

About 80% of the participants said they pay close attention to environmental regulatory news, and most acquire such information from online sources, including IPC newsletters, emails, and websites. Other sources include other EHS professionals, workshops, and conferences.

If you are an industry expert and would like to participate in future educational events on environmental regulatory topics, or if you have EHS-related questions, please do not hesitate to contact us.

Key Summary

• IPC urges the U.S. Government to support the full electronics ecosystem, not only semiconductor manufacturing
• U.S. competitiveness depends on strengthening PCB and assembly sectors alongside chip production
• U.S. electronics manufacturing has weakened despite strong design leadership
• Broader federal investment is needed to rebuild a resilient, secure electronics supply chain
• A holistic policy approach is essential to maximize the impact of semiconductor-focused initiatives

The U.S. Government should increase its support of semiconductor manufacturing but also of the entire electronics ecosystem if it wants the United States to remain globally competitive, according to comments submitted this week by IPC and the U.S. Partnership for Assured Electronics (USPAE) to the U.S. Department of Commerce.

IPC and USPAE support U.S. President Joe Biden’s Executive Order to conduct a 100-day review of the semiconductor supply chain. However, “Semiconductor fabrication is just one segment in a sophisticated, global supply chain for electronics, and all segments of the industry must be strong for the entire ecosystem to thrive,” the comments said.

In the document, IPC and USPAE make five main points:

• First, U.S. Government support of semiconductor manufacturing and advanced packaging is a vital U.S. strategic interest.
• Second, the assembly and printed circuit board industries are a critical part of the semiconductor supply chain.
• Third, U.S. electronics manufacturing has atrophied even as U.S. leadership in design has remained strong.
• Fourth, the United States has an important role to play in cultivating an environment in which electronics manufacturing can thrive.
• Finally, investments in electronics manufacturing broadly defined are essential to leveraging the significant investments the United States is making in the semiconductor industry.

“The failure of the United States to appreciate the strategic significance of electronics manufacturing has undermined the resiliency, competitiveness, and security of the U.S. electronics supply chain,” the comments conclude. “Competing globally in the years ahead will require the U.S. Government to adopt a more holistic approach to measuring the health of the electronics manufacturing ecosystem and appreciating the strong connection between the semiconductor supply chain and the wider PCB and assembly industries.”

Please let IPC know if you have any questions or comments on this issue.

IPC President and CEO John Mitchell details a new ESG for Electronics Initiative to develop guidance for electronics manufacturers on an industry-specific approach to ESG (environmental, social and governance) practices and reporting and to develop aspirational goals that the industry is working together to achieve.