Now that the CHIPS Act has become law, Nolan Johnson reconnects with PCBAA President Will Marsh to ask the question: What now? Will brings Nolan up to speed on the initial stages of implementation and administration, and provides more insight on the Supporting American Printed Circuit Boards Act of 2022.
Nolan Johnson: Hi, Nolan Johnson here with I-Connect007. I’m speaking with Will Marsh, vice president of government relations at TTM Technologies and the president of the PCBAA. Will, thanks for joining me.
Will Marsh: Thanks for your time today, Nolan. Honored to be here.
Johnson: Now, we are talking because there has been some industry specific legislation passed through not only Congress, but also signed by the president of the United States. We now have the CHIPS Act in process and that’s big news.
Marsh: We completely agree with you. We’re ecstatic that Congress and the president have been able to sign this initial piece of legislation that is going to address some economic and national security concerns that we see in the microelectronics ecosystem.
Johnson: Now that we’re into the implementation of rollout phase, what’s next?
Marsh: That’s probably the $64 million and/or the $52 million question in Washington, DC. What we know, Nolan, is that now the Department of Commerce is chartered with qualifying and distributing $52 billion to the domestic industry, primarily led by the semiconductor industry. About $2 billion of that $52 billion is going to be used for advanced packaging within the Department of Defense and the Department of Commerce for industry advancements. But the big question remains: How is it going to unfold? What are the protocols going to look like? This, in my understanding, is the largest distribution of funding by the Department of Commerce, per one piece of legislation. This is unchartered territory for the Department of Commerce. This is a big chunk of money. But at the end of the day, the reality is the companies that are competing for this, this CHIPS Act money, you can spend through $50 billion in a matter of a few hours with a handful of primes, right? From the Intels of the world, etc.
So, we consider this a down payment, like many are starting to say. Just compared to what the foreign countries are investing in their semiconductor operations. But the unknown is the timing on Department of Commerce distribution of said funding. We believe that it will come in the form of RFIs followed by RFPs and direct competition for said funding. Many in Washington are talking already whether the Department of Commerce will dole out a certain amount of funding to all semiconductor and chip eligible manufacturers. Or if they’re going to put a large percentage, $39 billion of it, toward one or two of them. The TSMCs, the Samsungs, or the Intels of the world.
The remainder of that $39 billion, that $12–$13 billion, is for tax incentives for companies as well. So really when we talk about the CHIPS Act being $52 billion, once you take off the $2 billion for advanced packaging, and once you look at the breakdown of how the bill distributes the money, or how Commerce is directed distribute the money, it then becomes a $39 billion pot. And as you know, and as your readers and listeners know, we have seen proposals that range anywhere between $10 and $20 billion per foundry. These are big numbers, but at the end of the day, the government was able to move the CHIPS legislation across the finish line. The president, as you know, earlier this week signed the legislation into law. But what we like to say is this is really the getting started point, not the ending point.
Johnson: That’s a lot of money to administer for commerce. Is this a situation where Commerce may be enlisting help from other bureaus in order to administer to the entire program?
Marsh: No, I believe they’re the lead executive agent for process, document control qualifications. I believe that they will be the one stop shop minus the Department of Defense. The Department of Defense is due to capture about $2 billion of that for advanced packaging, RDT&E, etc.
Johnson: Is it fair to assume that it’s too early for a rollout timeline?
Marsh: It is absolutely too early. Great question, and I can answer it definitively. The Department of Commerce was still trying to find its way through the legal aspects of the bill.
Johnson: What does this mean for the printed circuit board support legislation, HR7677, which is following behind?
Marsh: Thanks for giving us an opportunity to talk about the supporting the Supporting American Printed Circuit Boards Act of 2022. First, we are extremely proud of the industry’s opportunities to help guide and inform Congress to even draft this piece of legislation. The first challenge in anything you do in Washington is gaining access. The second challenge in Washington is educating members and staffers on your issue in this case, it’s an industry-wide issue. And then the third challenge in anything you do in Washington is agreeing to words, right? On paper. And so we could not be prouder of what the members, Congresswoman Eshoo of California and Congressman Moore of Utah, have done in drafting HR7677, and offering it as a bill for fair consideration in the House of Representatives. We currently do not have a Senate companion bill.
We are working on that with our sister organizations like IPC and USPAE and others. But because there are so few legislative days left in the 117th Congress, we fully expect that this bill will be reintroduced the first week of the 118th Congress. That is why we—as in Travis Kelly, the chairman of PCBAA and also the CEO of Isola—and me spend so much time on Capitol Hill, gaining co-sponsorship, helping educate and advocate for this piece of legislation. So that in the first week of the 118th Congress in January, when members are sworn in, this piece of legislation can already be introduced. And as you know, Nolan, Washington works in mysterious ways, especially the legislative branch, but strength in the numbers always prevails. Having a starting point of 20 members beats two, 50 members beats 20, etc.
The more we gain co-sponsorship, the more that raises the attention of the piece of legislation that’s been referred to three separate committees of jurisdiction. All three have to spit that out of their committee before it even gets considered on the floor of the House Representatives. It's about passing some of those initial challenges, overcoming those challenges of educating staff on the issue, agreeing to the right verbiage. Then there's the submission. The introduction of a bill in the House of Representatives are huge accomplishments in our opinion. And we couldn’t be prouder of the ability for this bill to be a follow-on or a companion to the CHIPS Act.
The CHIPS Act, as you know, really is focused on one piece of the microelectronics ecosystem. What the PCBAA has really been doing is trying to educate and advocate for a microelectronics ecosystem solution. We need secure domestic supply for all components of the microelectronics ecosystem. We think that the CHIPS Act is a noble cause. We think that this is something the country had to do. We are impressed that it only took two years to get this thing signed into law, but we believe this is the first salvo in a longer mission to address domestic supply chain issues for critical components for not only economic security, but national security.
Johnson: I’m picking up some turns of phrase you’ve used. First: salvo. Second: Strength in numbers. How do the people in the industry line up to help?
Marsh: Great question. Once again, participation. It’s kind of like being a real estate agent—it’s location, location, location. Well for us, it’s participation, participation, participation. And participation is defined by your voice, your advocacy, your message in a greater group. We use the example of megaphones. You can go out on the street behind you and use a megaphone, but if there’s a hundred people on the street with megaphones, you’re going to gain a lot more attention. We are trying to promote not only discussion, but the advancement of legislation that addresses the ecosystem issue for a secure domestic supply of the entire microelectronics ecosystem. It's participation by through associations, by writing your members of Congress, by asking questions, by writing op-eds, by just having conversations with your peers. It's creating that sense of discussion actually helps shape a debate and an outcome of a piece of legislation.
Johnson: Well Will, those are great words of advice to help move this forward for the greater good of all of us. Thanks for taking the time to bring us this update.
Marsh: Well, thank you. Once again, Nolan, it’s been a lot of fun and remember: Chips don’t float.
Johnson: Here with Will Marsh, I’m Nolan Johnson for I-Connect007. Thanks for listening.