US House of Reps passes the $280bn CHIPS semiconductor bill on to Biden’s desk
Link copied to
Late last week the US Senate passed the US CHIPS and Science Act – legislation that promises to subsidise the domestic production of semiconductor chips.
Then one day later the House of Representatives also passed the Act – now it’s on to President Joe Biden who is expected to sign it into law this week.
Here he is getting the news the bill was on his desk.
I got some good news yesterday.
Here’s the moment when I heard we had enough votes to pass the CHIPS and Science Act. pic.twitter.com/GqQ2jvDvrJ
— President Biden (@POTUS) July 29, 2022
It’s kind of a big deal for the semiconductor industry who have been suffering since the pandemic exacerbated chip supply shortages as demand for consumer electronics skyrocketed.
And since semiconductors are literally used in every electronic device you can think of – from cars to phones to fridges – those industries have also felt the pressure down the supply chain.
The idea of boosting domestic production is to reduce America’s reliance on China and Asian countries who dominate semiconductor production.
Only 12% of chips are currently manufactured domestically in the US currently, compared to 37% in the 1990s, according to S&P Global Market Intelligence.
And it comes down to funding.
The Creating Helpful Incentives to Produce Semiconductors (CHIPS) bill includes more than $52 billion to boost domestic chip production and research.
Of that total, $39 billion is specifically earmarked to assist entities in building, expanding or modernising domestic facilities and equipment for semiconductor fabrication (or fabs for short), assembly, testing, advanced packaging or research and development.
The bill will also establish a National Semiconductor Technology Centre to conduct research and prototyping of advanced chips, as well as create a centre on advanced semiconductor packaging – investments the Semiconductor Industry Association says are needed to enable US companies to maintain their technological edge in semiconductor materials, process technology, architectures, designs, and applications.
And Biden is keen as a bean to sign it into law.
By making more semiconductors in the United States, the CHIPS and Science Act will increase domestic manufacturing and lower costs for families.
I look forward to signing this bill into law and continuing to grow our economy for working families across the country.
— Joe Biden (@JoeBiden) July 29, 2022
Back in April laser diode player BluGlass (ASX:BLG) picked up a semiconductor fab in Silicon Valley for a cheap $2.5 million and executive chair James Walker says while it’s not clear just yet if foreign-owned locally based companies can access the funding, it’s a great time to be in the game in the US.
“The US don’t want to be relying on Asia for chips going forward,” he said.
“Over the last two and a half years not having the capability in the country and all the supply chain issues that came from not having control of your own manufacturing process, has come home to roost, and therefore led to this Act coming up in the first place.
“For us personally, it’s not exactly clear yet if foreign-owned locally based companies can apply – it’s definitely not assured – but if so we could apply for some of the assistance as part of that US$52 billion package.”
Walker said from an Australian point of view, because don’t have an industry here (well, the NSW Government is trying to start one) this probably puts us even further behind.
“Now we’re not just competing with companies that are already producing out of Asia, but now we will also have a well-funded US market looking to do the same thing to increase their capabilities,” he said.
“That might mean it will probably be a little bit harder to create our own industry here.
“But I guess BluGlass has got a little bit of natural protection to that by having some of our processes here in Sydney and the other part of the processes in California.”
BluGlass is currently building laser diode chips at 405, 420 and 450 nanometres, with plans to launch six or seven products this year, and just shipped its first alpha product prototypes to a customer.
The chips are used in applications where copper is involved, for example in industrial copper welding in iPhones, medical diagnostics tools, electric cars and electric batteries.
And it’s a market that Walker says is worth a whopping US$380 million.
“We’re working to bring all our process in house, and at full strength, once we’re running as a commercial manufacturing facility, we’ll have capacity of nearly US$100 million in that US$380 million market,” he said.
“So, we can get significant market share once we’ve got a product out.”
BLG’s share price today: