OPINION

Opinion: CHIPS Act is a bold step to take the pressure off American households

Cincinnati Enquirer

The last decade has seen an unprecedented renaissance in American manufacturing. But supply chain disruptions, inflation, and rising competition from China require bold action to maintain that momentum. Fortunately, Congress has taken action.

Annette Clayton, CEO of Schneider Electric North America and chair of the board of governors at the National Electrical Manufacturers Association.

Just as steel and coal were the crucial components of the last industrial revolution, semiconductors are the critical raw material of the modern age. But the supply chain snarls that started with the COVID-19 pandemic and continue to this day have shown just how important it is for the U.S. to have a healthy domestic semiconductor industry.

The CHIPS Act, passed by a strong bipartisan majority of the U.S. House and Senate on July 28 after more than a year of debate, represents the nation’s best chance to build a vast semiconductor manufacturing hub here at home. President Joe Biden is expected to sign the bill into law shortly.

The CHIPS Act recognizes that it is time for a government-wide effort to strengthen supply chains critical to the nation’s economic vitality and national security. Creating new semiconductor hubs across the country is a win-win that creates high paying jobs, fosters new centers of innovation outside the coasts and nurtures spinoff industries that can drive incredible growth and new investment.

The bill offers critical funding to build new chip factories, including support for projects like Intel’s $20 billion manufacturing hub in the Heartland, as well as investment tax credits to further advance domestic manufacturing and cutting edge scientific research. American manufacturers have called on Congress to provide this support for years as they attempt to compete against heavily subsidized competitors in Taiwan and China.

With inflationary pressures affecting all aspects of the U.S. manufacturing value chain and causing rising costs for households across the country, these investments will ensure that global supply chain issues can never again have this kind of cascading impact on American consumers.

As government agencies move to implement this bill, they should consider the full electronic supply chain and all types of chips that power our manufacturing sector. The Commerce Department must include memory chips, microprocessors, standard chips and chips with complex embedded software systems to support the full spectrum of manufacturing needs.

While complex cutting-edge chips are needed for smart phones and other advanced projects, the so-called “legacy” chips play a vital and often underappreciated role in the electrical products people depend on every day: from home and industrial lighting to traffic control systems, to the manufacturing infrastructure that helps produce our cars and clean energy technologies. Most people would be surprised to learn that new semiconductor manufacturing facilities could never even be built without the legacy chips required in the circuit breakers that power these factories.

Many of the products that consumers need the most are made using these simpler and more versatile chips. And shortages of these chips have been a key driver of supply chain issues. Yet, investment has lagged, despite their comparatively low cost of production.

The last two years have shown how easy it is for bottlenecks to emerge. Those responsible for implementing the CHIPS Act must adopt a holistic view of the broader semiconductor ecosystem sector and include key elements like transistors, diodes and other components which are critical to manufacturing many electrical products. In other words, building the critical semiconductor supply base America needs to compete in the global marketplace requires our policies to extend beyond chips manufacturing.

The CHIPS Act has come through a long and difficult process, and there remains much more to be done to properly support a cutting-edge American manufacturing sector. But the steadfast support of leaders like President Biden, Senate Majority Leader Chuck Schumer, Senators Susan Collins, Todd Young and John Cornyn, along with House members on both sides of the aisle, has resulted in the most meaningful progress in decades.

This bill is an unprecedented step in the right direction that will ensure the strength of the supply chain for one of our most vital 21st century resources. It is a tangible investment in an American manufacturing renaissance — one that can help cut costs for consumers feeling the pinch today, while building a stronger industry for tomorrow.

Annette Clayton is the CEO of Schneider Electric North America and is Chair of the Board of Governors at the National Electrical Manufacturers Association (NEMA). Schneider Electric has a substantial manufacturing footprint in the United States, including their Lexington, K.Y. Smart Factory which serves a critical role in the manufacturing of electrical components key to the energy transition.