If the past few years of chip shortages and supply chain constraints have shown us anything, it’s the irrefutable fact that semiconductors are the lifeblood of America’s technology-driven economy and a wellspring of innovation. America used to be a semiconductor manufacturing powerhouse. Today, just 12 percent of global chips are made in the U.S.—down from 37 percent in 1990, according to the Semiconductor Industry Association. Other countries offer generous subsidies, putting America at a competitive disadvantage and centralizing chip manufacturing to Taiwan, Korea and China.

After more than two years of wrangling and revisions by both houses of Congress, passage of the CHIPS for America Act, now signed into law by President Joe Biden, will provide more than $52 billion to invest in domestic U.S. chip manufacturing and research—bolstering U.S. semiconductor manufacturing competitiveness, economic and national security and will create high-paying semiconductor manufacturing jobs in America. Without these financial incentives, U.S. semiconductor giants will likely build and expand offshore. 

Often called the “oil of the 21st century,” chips are found in virtually every device, system or network that touches our lives. A single electronic product may contain hundreds or even thousands of chips from multiple vendors, and so any supply chain disruption can negatively impact broad sectors of the economy. Semiconductors underpin the breakthroughs and inventions that are driving the future of the U.S. economy, our national security and deep-tech innovation, from 5G/6G communications to AI and quantum computing to electric vehicles and autonomous driving and to advanced aerospace and defense systems.

As the CEO of a 5G chipmaker, I know firsthand how critically important it is to have stable, reliable manufacturing partners and a resilient supply chain. Large chipmakers like Intel, GlobalFoundries and TSMC have stated they’re counting on subsidies funded by the CHIPS Act to help finance the costly construction and expansion of fabrication plants, or “fabs,” on American soil. 

Movandi represents a class of companies that are a driving force for innovation in the semiconductor industry and for the future of our smart, connected world. As a fabless company, we focus our resources on IC design and partner with large foundries for reliable, cost-effective chip manufacturing. In turn, large foundries have demonstrated their willingness to work collaboratively with smaller companies to ensure their products are properly prioritized for production in their factories. This willingness and commitment should be emphasized when the CHIPS Act funds are allocated. This close relationship is at the heart of the fabless business model. Without fabless chipmakers like Movandi and many others, innovation and growth in our industry would come to a standstill. 

Some large fabless chip companies have objected to the CHIPS Act because they believe it favors large competitors that have their own manufacturing capacity and are planning to build or expand their fabs in the U.S. In most cases, foundries are not competition to the chip companies but more like their suppliers and enablers. In cases where large chipmakers have their own chip design capability and thus the ability to compete with their customers, conditions could be placed on the use of the funding for foundry construction to enable other fabless companies to have access to these foundries. Funding also should be allocated to drive innovation in chip design. To this end, large foundries have an obligation to provide special support to help smaller fabless companies thrive and innovate. 

Passage of the CHIPS Act will clearly be a boon for large-scale chip manufacturers seeking to build and expand fabs in the U.S., as well as for fabless companies that partner with these foundries. In the long run, this critical legislation will also nurture a robust chip ecosystem.  

Listen to Microwave Journal's conversation with Maryam Rofougaran about the CHIPS Act, recorded on August 26, 2022.