Chip equipment up 13% in May as industry backs CHIPS Act

chip
With chip production in the U.S. on the decline over the past 20 years, Congress is introducting an act to provide tax credits for investment in semi facilities and equipment. The May equipment billing results were an encouraging uptick. (Sensors)

Despite COVID-19, billings rose 13% in May over a year ago for semiconductor equipment manufacturers based in North America.

Billings in May were $2.35 billion, up nearly 3% from April and up 13.1% over May 2019, according to a report issued Thursday by SEMI, a global industry association of electronics manufacturing and design supply chain companies.

SEMI CEO Ajit Manocha called the May performance a demonstration of the semi industry’s “long-term resiliency.”  The most recent high for such billings was reached in December 2019, when billings hits nearly $2.5 billion for North America.

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Even with that positive report, the U.S. broadly has seen a 50% decline in its share of global semi manufacturing capacity over the past two decades, SEMI said recently.

 That decline has caught the attention of Congress with the recent introduction of the CHIPS for America Act to boost U.S. semi manufacturing.  CHIPS stands for Creating Helpful Incentives to Produce Semiconductors for America.

The act has bipartisan support and would provide a 40% refundable federal investment tax credit (ITC) for semi manufacturing facilities and equipment.  Cosponsors of the act are as diverse as Sen. Mark Warner, D-Virginia, and Sen. Marco Rubio, R-Florida, but there are seven sponsors in all from both the Senate and House.

SEMI issued a recent statement saying the legislation would improve competitiveness of semi research, design and manufacturing in the U.S. and result in thousands of new jobs and bolstered national security.

In the U.S., 25 states host at least one major semiconductor supply chain facility. U.S. headquartered companies also account for roughly half of global semiconductor sales, but only 12% of the world’s semi manufacturing capacity is located in the U.S.   The entire supply chain in the U.S. accounts for about 240,000 high skill and high wage jobs nationwide.

SEMI said that a lack of a U.S. federal tax credit and the use of robust incentives in other countries has been a key factor in the construction of semi manufacturing facilities overseas. 

RELATED:  Report: MEMS and sensors fab capacity to grow 25% through 2023

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