Commentary: Pass the CHIPS Act now: Market-based solutions that are attracting chip manufacturers to Texas can work nationwide
July 28, 2022
Opinion by TAM President & CEO Tony Bennett as published in the Dallas Morning News.
Texas Instruments’ new semiconductor wafer fabrication plant, and thousands of jobs, are coming to Sherman. On the heels of this good news, we learned that a subsidiary of a Taiwanese chip-making firm is also making plans to open a new facility nearby that is expected to create 1,500 jobs. The firm found Texas to be an attractive place to do business for many reasons, no doubt. One of those reasons was that the project was awarded a $15 million grant by the Texas Enterprise Fund. Last year, Korean chip maker Samsung announced it would create 2,000 jobs in Taylor for a project that was also spurred by a substantial Texas Enterprise Fund grant.
These positive developments will help strengthen our national security by alleviating the current supply chain disruption related to semiconductors, which power almost every aspect of our daily lives. If you are reading this on a smartphone or tablet, you are relying on semiconductor technology right now. The pandemic-induced chip shortage cost the U.S. economy more than $200 billion last year alone, and it still plagues our economy today.
Semiconductors were invented here in the United States, represent our largest electronic product export in dollars, and are our fifth-highest product export overall. However, our chip manufacturing capacity has dwindled as a share of global capacity, a slowdown that is a major contributing factor to the current shortage. Other nations have instituted aggressive incentives to build out their manufacturing capabilities while the U.S. government has not. As a result, we are overly reliant on supplies of foreign-made microchips.
As with so many things that relate to the American economy, just look to Texas for the solution. It’s not by coincidence that we’ve been named by Chief Executive magazine as the best place to do business for 18 consecutive years. Texas programs, including the grant incentives provided by the Texas Enterprise Fund, are bringing chip making jobs to America. Washington should learn from this and pass its own incentives package quickly to help reduce our dependence on other nations by growing the number of domestic manufacturers of semiconductors.
As it happens, Congress can take steps this month to support domestic chip making by passing two measures that President Biden is ready and willing to sign.
CHIPS Act grant funding would provide $52 billion in incentives for the domestic chip industry. It has bipartisan support in both chambers of Congress. Another initiative, an investment tax credit for investments in semiconductor manufacturing, both for manufacturing equipment as well as the construction of semiconductor manufacturing facilities, is also under consideration.
The Texas experience shows these kinds of market-based incentives work. Unfortunately, these two proposals are presently being held up by partisan wrangling over unrelated issues that have nothing to do with American microchip manufacturing. Congress should stop delaying this critical legislation and do what’s right for American employers, their workers, and consumers.
Congress is running out of time. China has made global supremacy in this sector a key element of its industrial strategy. Bloomberg reports that Chinese orders for chip making equipment skyrocketed in 2021. In 2020, China’s semiconductor industry grew by an astonishing 30.6%.
The Texas federal delegation should share the story of the “Texas Miracle” with their colleagues and convince them to pass the CHIPS Act and a framework for an investment tax credit.
Tony Bennett is the president and CEO of the Texas Association of Manufacturers. He wrote this column for The Dallas Morning News