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Tick Tock Tech – All This Talk About Chips

August 1, 2022
By Matthew Caldecutt

The semiconductor industry is back in the spotlight with the Senate and House passage of the bi-partisan “Chips and Science Act,” focused largely on driving domestic production of semiconductor chips. This is in response to recent events, such as the COVID-19 pandemic and war in Ukraine, which have created major issues in both chip production and the broader semiconductor supply chain. The chips in question are used in a wide variety of products – including motor vehicles, cellphones, medical equipment and military weapons – so shortages have caused price hikes and disruptions in countless connected industries. Communications professionals for semiconductor companies and related industries should pay close attention as these efforts to bolster high-tech manufacturing will begin to drive a steady news cycle.

What is the Chips and Science Act?

The Chips and Science Act is primarily a way to directly pay semiconductor companies for setting up semiconductor fabrication plants – or “fabs” – and making future investments in the U.S. It sets aside around $50 billion for semiconductor companies with $39 billion to build, expand or modernize domestic facilities, and $11 billion for research and development. Another $2 billion will help fund other areas of the semiconductor industry – education, defense and future innovation. In addition to the money set aside immediately following its passing, the act contains an added bonus – investment tax credit for manufacturing.

Is the Chips and Science Act Necessary?

Proponents see the Chips and Science Act as critical given the impact of the current global semiconductor chip shortage on numerous industries ranging from appliances to automotive – many produced in the U.S. Put simply, a stronger U.S. capacity for production could shield the affected companies from other interruptions and possibly spur innovation through close collaboration. At the same time, this could also help to reverse the U.S.’ declining role in semiconductor manufacturing, which has fallen from nearly 40% in 1990 to 12% today, according to a recent report from the Semiconductor Industry Association.

At the same time, there are some who believe that the semiconductor industry has recovered from the dearth of available chips at the pandemic’s height and demand will continue to fall, especially outside of the U.S. According to Gartner, for example, a recession may also further decrease the need for semiconductors, should consumers curtail spending on the devices they power, especially mobile phones.

What do Communicators Need to Consider Before Joining the Chip Conversation?

This development presents opportunities and potential pitfalls that need to be considered when seeking to participate in this news cycle.

On the one hand, attempts to jumpstart manufacturing of any sort will create jobs – high-paying ones in particular – and this is traditionally well-received by the media and U.S. public. Public relations professionals can tap into an array of outlets for such attention – from press where future factories may be located to regional when announcing elected officials’ support for such opportunities in their respective districts. There’s also the opportunity to go further and speak to how the new professionals working at these sites will contribute to tax bases, possibly establishing businesses to support what’s being done there, and more. And, when it comes to the businesses that move in or are established, they, too, can see a halo effect as they draw attention to working with local schools or assisting with a factory being environmentally conscious. In short, there’s something PR-able well before ground is even broken.

And yet, there’s also an obvious need to be cautious with regard to media engagement at this time. The semiconductor industry has experienced price increases as demand outstripped supply, so there’s some notable concern about those receiving these subsidies and incentives given the profits it has made possible. It’s important to be transparent about how the funds would be used – when, where and whom they would benefit as well as how quickly. There was intense lobbying by international companies without a domestic base to their name that has led to concerns about the value of this investment if it’s going to large and established manufacturers who may ultimately not commit to transferring production here. With the passage, it’s time to start speaking to how building here was always the plan and be seen as a partner.

Beyond labor and real estate, there will be a ripple effect of opportunities in other verticals connected to resources the government feels are needed to support the semiconductor industry. There will be research coming from educational institutions, the supply chain itself will be examined, and new sources for critical minerals will have to be identified. And, diversity in hiring will be aided at a number of institutions. Borne of the pandemic, the act sets a new direction for high tech in the U.S. – the creation of multiple “Silicon Valleys” – and a new set of news cycles.