Semi industry wants 'essential' status to sustain production with coronavirus

The semiconductor industry wants to make sure city and state shutdowns because of coronavirus don't restrict semiconductor production. (Intel)

The Semiconductor Industry Association (SIA)  has sent letters to President Trump and federal officials urging them to designate semiconductor businesses as “essential” so that industry operations will continue amid state and local coronavirus shutdowns. 

“We call on governments to specify semiconductor industry operations as ‘essential instrastructure’ and/or ‘essential business’ to allow continuity in operations of an industry that underpins vital sectors of the economy,” the SIA said in a recent report.

The SIA said the designation is necessary because semiconductor businesses are part of the supply chain of essential goods; supply products that allow people to work from home; and supply other essential businesses with the support or supplies necessary to operate.

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SIA noted that semi designers, fabs and testing facilities in China were allowed to operate non-stop during the COVID-19 outbreak, subject to certain worker safety protocols. (However, many factories there are still not operating at 100%, according to industry officials, because they are not fully staffed, and workers are reluctant to show up.) In South Korea, most operations continued uninterrupted, and chip exports actually grew by 9.4% in February, SIA said.

So far, the industry is on an initial U.S. list of “essential critical infrastructure workers” kept by Homeland Security’s Cybersecurity and Infrastructure Agency (CISA) and is recognized only by the states of California, Pennsylvania and New York among those businesses that may continue operations.

“We call on all states, provinces, and localities taking action to address the public health crisis to ensure the continued operations of the semiconductor industry and its suppliers,” SIA said.

In a blog issued Wednesday, SIA CEO John Neuffer said that SIA is working with Homeland Security to refine its guidance “to make clear to state and local governments the critical role our industry plays in keeping America’s infrastructure functioning and our economy moving.”

He noted that semiconductors underpin healthcare and medical devices, telecommunications, energy, finance, transportation, agriculture and manufacturing. “They are key components of the technologies that control critical infrastructure such as water systems, the energy grid and communications,” he said.

Because the semi supply chain is globalized, he noted that semi shortages created through government restrictions in one region “cannot be readily made up by production in other regions.”

While SIA has raised the concern with U.S. officials, Neuffer also called on governments globally “to prioritize continued operations for their domestic semiconductor companies and their suppliers.”

In a letter to Homeland Security and CISA dated March 20, Neuffer asked the officials to amend its guidance about essential workers to include semiconductor industry workers broadly. That broad definition should include “workers necessary for continuity in research, design, manufacturing and supply chain operations, including construction of manufacturing facilities, in the semiconductor industry,” the letter said.

CISA’s list of critical infrastructure workers included “microelectronics and semiconductors” workers, but Nueffer said CISA should supplement the list with SIA’s broader definition “to assist state and local officials who may not be familiar with the industry and its significance.”

In a letter to President Trump dated March 19, Neuffer asked his administration to issue guidance to states and localities “that specifies the critical nature of the semiconductor industry in the U.S., defines our industry as ‘essential infrastructure’ and/or ‘essential business’ for the purposes of managing the workforce and operations in this crisis and promotes continuity in operations of one of America’s most vital industries.”

CISA guidance issued March 19 to state and local governments on what is considered the “essential critical infrastructure workforce” lists 16 groups including “critical manufacturing” but does not specifically name semiconductor workers. The guidance for critical manufacturing workers does say, “workers necessary for the manufacturing of materials and products needed for medical supply chains…” and many others. In fact, all the industries named on the CISA list of critical manufacturing workers rely in one way or another on semiconductors.

SIA’s website notes that the U.S. semi industry is the global leader, with 45% of the global market share. Semiconductors also make up the fourth-largest U.S. export after airplanes, refined oil and crude oil.

The industry directly employs nearly 250,000 people in the U.S. and supports an additional 1 million jobs, SIA noted.

Nearly half of U.S. semi companies’ manufacturing base is in the U.S., with 19 U.S. states serving as home to major fabs. In the states hardest hit by coronavirus, there are multiple fabs, including eight in California and four in New York. Global Foundries operates in East Fishkill, New York, a suburb of New York City, which is now considered the epicenter of the virus in the U.S.

Global Foundries CEO Tom Caulfield said in a letter on March 23 that its New York fab was designated "essential" by New York state officials. Two other GF fabs in the U.S. also have that designation. 

RELATED: $2T stimulus deal helps prop up semi stocks (fingers crossed)

 

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