Supply chain disruptions related to the COVID pandemic, geopolitical tensions, and other factors are forcing companies to rethink their global manufacturing operations and suppliers with an eye toward hedging against risk. For close to a decade, IPC has been encouraging its members to establish a layered approach to supply chain management, one that recognizes that companies must have multiple supply chains that complement one another. The challenge for companies that pursue this layered approach has always been managing the tension between supply chain risk and optimization. Hedging against risk raises costs, while fully cost-optimized supply chains can expose companies to disastrous risk.
Now these long-standing supply chain considerations are being upended as many governments are expanding investments in semiconductors and potentially in the broader electronics industry. In the United States, Congressional action to approve $52 billion in CHIPS Act funding, with strong support from President Biden, is creating huge expectations for an unprecedented infusion of funds into our industry. Congress is also considering an overhaul of federal R&D programs, as well as CHIPS Act-like legislation to bolster the U.S. printed circuit board industry.
These are all exciting developments, but the looming and still unanswered question is whether Congress can meet these high expectations. Passage of the Bipartisan Innovation Act, which includes the CHIPS Act funding, will create the framework for government support, but Congress will still need to appropriate the actual funds. The administration, congressional champions, and the tech industry had hoped Congress would approve these funds last summer; then by year-end; then by spring 2022; and now by this summer. The likelihood is dimming, however, as the approach of the midterm election starts to guide the decision. Nothing in recent political history would suggest that Congress can pass a bill of such significance in the months leading up to an election.
And yet, the industry continues to press the case, understanding that progress can occur in surprising ways, and that no one piece of legislation is ever a silver bullet. The industry must walk and chew gum at the same time. Even as we lobby for passage of the CHIPS funding—which incidentally will support IC substrate fabrication—we must also advocate for a half dozen other initiatives that collectively hold the potential for a manufacturing resurgence in the U.S. These other initiatives include the PCB Act, the supply chain resiliency fund in the Bipartisan Innovation Act, and a presidential national security determination on PCBs and IC substrates.
Again, all these efforts are positive, but proposals don’t move the market, and they certainly don’t lead to private sector investment in U.S. manufacturing. If Congress fails to act, it will have dire implications for U.S. semiconductor manufacturing, but it will also send a signal to companies worldwide that the U.S. is not serious about manufacturing. It suggests that the U.S. government has learned nothing about supply chain vulnerabilities from the pandemic, natural disasters, or geopolitical tensions. It suggests that the U.S. does not yet appreciate the connection between manufacturing, on one hand, and innovation, security, and resiliency on the other.
Our industry is now waiting for the government to show up in the way they have promised. The wait is stymying private sector investments, and more and more, companies are deciding to leave the waiting room and take opportunities to nations with governments that are ready to back rhetorical declarations with real support—financial and regulatory.
The U.S. government is being tested right now. Can its leaders come together and position the United States for technological leadership in the years and decades ahead? It’s not yet clear they are ready to meet the test.
This column originally appeared in the July 2022 issue of PCB007 Magazine.