The U.S. semiconductor industry is a key driver of America’s economic strength, national security, global competitiveness, and technology leadership. Semiconductors enable the systems and products that we use to work, communicate, travel, entertain, harness energy, treat illness, and make new scientific discoveries. Semiconductors were invented in America, and U.S. companies still lead the global market, accounting for nearly half the world's chip sales. Still, the U.S.-based industry faces significant challenges. The share of modern semiconductor manufacturing capacity located in the U.S. has eroded from 37% in 1990 to 12% today, mostly because other countries’ governments have invested ambitiously in chip manufacturing incentives and the U.S. government has not. Meanwhile, federal investments in chip research have held flat as a share of GDP, while other countries have significantly ramped up research investments. And while America is still the global leader in semiconductor design—the complex mapping of a chip’s tiny and intricate circuitry—its lead is slipping and not assured.
To help promote innovation and ensure America’s continued technology leadership, policymakers should do the following:
1.Invest in U.S. Semiconductor Leadership:
• Fund the domestic semiconductor manufacturing, research, and design provisions in the CHIPS for America Act.
• Enact an investment tax credit encompassing both manufacturing and design to spur the construction of new onshore advanced semiconductor research, design, and manufacturing facilities and to promote domestic chip innovation
2. Strengthen America’s Technology Workforce
• Implement a national strategy — backed by appropriate investments and in consultation with education leaders and the private sector — to improve our education system and increase the number of Americans graduating in STEM fields.
• Reform America’s high-skilled immigration system to enable access to, and retention of, the best and brightest in the world
3. Promote Free Trade and Protect IP:
• Approve and modernize free trade agreements that remove market barriers, protect IP, and enable fair competition.
• Expand the Information Technology Agreement, one of the World Trade Organization’s most successful free trade agree
. 4. Cooperate Closely with Like-Minded Economies:
• Recognizing the global nature of the semiconductor industry, expand collaboration with like-minded allies on shaping a regulatory and legal environment more conducive to growth, innovation, and supply chain resilience in such areas as regulatory coherence, standards, and export controls
