US Department of Commerce Announces Industrial Base Survey of American Semiconductor Supply Chain

On December 21, 2023, the US Department of Commerce (DOC) announced it will launch a new survey in January 2024¹ to serve as a foundation for continued analysis of the capabilities and challenges of the broader US semiconductor supply chain and national defense industrial base. The survey intends to identify how US companies are sourcing older generations of semiconductors (known as mature-node or legacy chips)² to “inform US policy to bolster the semiconductor supply chain, promote a level playing field for legacy chip production, and reduce national security risks posed by the People’s Republic of China (PRC).”³

The survey is in response to findings in the December 2023 Congressionally-mandated report by the DOC Bureau of Industry and Security (BIS) Office of Technology Evaluation, titled “Assessment of the Status of Microelectronics Industry Base in the United States.”⁴ This report “is based on a survey of organizations that design, manufacture, or distribute microelectronics in the United States, and aims to summarize key industry attributes and experiences and provide broad guidance on what is needed to support a robust domestic semiconductor manufacturing ecosystem.”⁵ The categories of information collected include organization and facility information; product capabilities and outsourcing; input and manufacturing equipment requirements; current and expected end uses; supply chain risk management practices; US employment and workforce development; financial information; joint ventures, partnerships, and technology transfer; competitive factors and challenges; and long-term development and investment.⁶

The BIS assessment makes several key findings relating to the United States’ role as “an essential leader in the global microelectronics sector, with companies headquartered in the United States accounting for approximately half of worldwide semiconductor revenue.”⁷ The report also addresses how the US can continue to improve and protect the US-based manufacture of semiconductors and related items.⁸ The report’s key findings focus on the improvement of existing infrastructure such as creating more domestic sources of “three categories of materials: bare wafers, gases, and wet chemicals”; increasing and improving the US semiconductor industry workforce; and continuing to protect US research and development in the microelectronics sector.⁹ The report also highlights the need for US government support for the cost of manufacturing, as this cost is much less outside of the US due to government subsidies and lower operating costs.¹⁰

The BIS report also contains four categories of recommendations to increase US semiconductor manufacturing capabilities, outlined below:

• Level the Playing Field for Semiconductor Manufacturing in the US: The report recommends the US government take a number of steps to help companies “compete on a level playing field” in the manufacturing of semiconductors.¹¹ The report identifies obstacles such as higher costs, foreign competition, labor availability and costs, and worker and skills retention.¹² To address these obstacles, the report recommends that the US incentivize the “construction and modernization of semiconductor fabrication facilities” as well as “domestic assembly and packaging capabilities”; “aggressively protect[] intellectual property”; engage in the “use of export controls”; and “defend domestic semiconductor investments from PRC nonmarket behavior” (e.g., subsidies) by the imposition of tariffs or expansion of export controls.
• Ensure US Leadership in Advanced Research and Development: The report recommends that the US government protect research and development by continuing to fund the National Semiconductor Technology Center and implementing research and development incentives designed to counter the significantly higher funding provided outside of the US.
• Support the Availability of High-Quality Manufacturing Materials and Inputs: The report recommends the US maintain “a healthy domestic semiconductor manufacturing base” through “a robust material supply chain that is resilient to regional or company-specific shocks.”¹³ The report recommends “strengthening [the] US supply of critical materials” and “increasing coordination with allies and partners.”¹⁴ The report also recommends that the US “consider expanding the advanced manufacturing tax credit included in the [CHIPS and Science Act of 2022] to apply to specialized materials needed for the production of semiconductors, as well as for the printed circuit boards that chips connect to.”¹⁵
• Build a Diverse and Accessible Talent Pipeline for Jobs in the Semiconductor Industry: The report recommends that the US work to increase the abilities of US companies “to attract and retain talented workers from around the world.”¹⁶ The report notes this can be achieved through increasing the ability of US companies to hire and retain non-US citizens by “increasing the number of visas available, eliminat[ing] country-specific employment-based visas, . . . exempt[ing] highly skilled workers from employment-based visa caps . . . providing broader avenues to U.S. permanent residency and citizenship,” and investing in US education.¹⁷

The publication date of the survey results remains unknown; however, the launch of the survey reflects continued emphasis on US domestic sourcing and manufacturing of semiconductors as an area of policy priority for current US leadership. In January of 2024, BIS reached out to companies it identified as being engaged in the design or supply of mature node chips and suppliers, directly or indirectly, of products containing semiconductor devices that are essential to US national security and infrastructure. These companies are required by law to respond to the survey. Other companies that have not received outreach from BIS at this point can participate in the survey voluntarily through April 30, 2024.

¹ The survey is now available here.

² Commerce defines mature-node semiconductors for these purpose as semiconductors based on the 28 nm or larger generation of transistor technology, including logic and analog chips that are not based on FinFET, post-FinFet transistor architectures, memory chips of equivalent generations, and discrete, optoelectronic, or sensor semiconductors.

³ US Department of Commerce, Commerce Department Announces Industrial Base Survey of American Semiconductor Supply Chain, https://www.commerce.gov/news/press-releases/2023/12/commerce-department-announces-industrial-base-survey-american (Dec. 21, 2023).

⁴ The findings of that assessment are HERE

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¹⁷ Id. at 9.