US chip group: $52b is not enough, we need an extra $30b in federal funding

We need more free money from the government say silicon salesfolks

America's top booster for federal semiconductor aid is arguing that the country needs to spend tens of billions more in silicon incentives to ensure it doesn't lose leadership in chip design to other countries.

In a report released on Wednesday, the Semiconductor Industry Association (SIA) said the US should invest roughly $20 billion to $30 billion in semiconductor design and research and development through 2030 on top of the $52 billion in chip manufacturing subsidies that were approved by Congress in July. The group hired Boston Consulting Group to crunch numbers and lay out the reasoning.

While the US is trying to reshore manufacturing and grow its small share of the world's chip-making capability, fabless players like Qualcomm and Nvidia, and integrated device manufacturers like Intel, original equipment manufacturers ranging from automakers to cloud companies, and electronic design automation providers have bolstered its prominence.

However, the report warns American share of design-related revenues have begun to wane, dropping from more than 50 percent in 2015 to 46 percent in 2020.

If the US fails to make any public investments in the private chip design sector, SIA argues the country's share of design-related revenues could drop to 36 percent by the end of 2030.

While the US private sector invests in chip design R&D more than any other region, public investments by Uncle Sam currently amount to 13 percent of the country's total spending, according to the report. This puts the US behind mainland China, Europe, Taiwan, Japan, and South Korea, whose public investments average to about 30 percent, the report said.

To stop US from further ceding its leadership, the report argues for investing as much as $30 billion in the private chip design sector over the next eight years, with up to $20 billion consisting of tax incentives. SIA estimates this could result in additional design-related sales of about $450 billion over the next decade while also supporting roughly 23,000 new design jobs, all putting the US in line with other regions.

Recall that it took Congress more than a year to approve $52 billion in subsidies to boost domestic chip manufacturing. It's reasonable to wonder if legislators have any appetite left to pass more funding for an industry that has done well for itself up until the last few months and is now in cost-cutting mode due to a deflating economy.

After all, Qualcomm, Nvidia, and AMD tried over the summer to push for legislation that would include tax credits for both chip designers and manufacturers, but that ended up going nowhere for them, as the CHIPS and Science Act only ended up including such incentives for chipmakers.

That said, Matt Johnson, chair of the Semiconductor Industry Association, thinks now is the right time to talk about chip designers getting their share of taxpayer dollars:

Building on the momentum from the recent enactment of the CHIPS and Science Act to strengthen domestic semiconductor manufacturing and research, leaders in Washington should increase focus on maintaining and even extending our semiconductor design leadership that is so fundamental to our country's future.

We'll have to wait and see how this fares in the face of a shrinking economy and changing leadership in the House of Representatives. ®