May 19, 2021 - Economy & Business

Chip industry predicts big boost from federal funding

Illustration of a man struggling to push a giant semiconductor up a rocky mountain.  
Illustration: Aïda Amer/Axios

Aiming to sway budget-conscious legislators on the value of federal funding, the chip industry's U.S. trade group says that $50 billion in investment would boost the U.S. economy by $25 billion per year and create hundreds of thousands of jobs.

Why it matters: Congress gave conceptual blessing to the spending as part of a defense authorization bill, but has yet to allocate the funds.

On the Hill, the Endless Frontier Act is moving through Congress, with a final vote possible by the end of next week.

  • Senate Majority Leader Chuck Schumer introduced an amendment Tuesday that would include $52 billion in funding to implement legislation that would increase chip production in the automobile, military and other industries.

By the numbers: According to a study by Oxford Economics and the Semiconductor Industry Association, $50 billion in federal funding would translate to:

  • An average of 185,000 temporary American jobs over the next five years as new chip plants are built.
  • A boost of $24.6 billion annually to the U.S. economy over the same time period.
  • 280,000 permanent jobs added to the U.S. economy by 2026, of which 42,000 would be jobs in the chip industry itself.

The big picture: The U.S. accounts for about 12% of global chip production, down from more than about 37% in 1990. Many observers see the lack of U.S. capacity, especially in leading-edge chips, as an issue of concern for both economic and national security.

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