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US Semiconductor Manufacturing and the CHIPS Act

The CHIPS Act (Creating Helpful Incentives to Produce Semiconductors) is part of an effort to increase national security by strengthening the supply of critical technologies. The act is designed to provide “investments and incentives to support U.S. semiconductor manufacturing, research and development, and supply chain security.” However, faced with climate concerns, military aid for Ukraine, escalating gasoline prices, and trade with China, Congress has been slow to implement the act’s funding package—which provides the first subsidies of their kind for U.S. chip manufacturers. Meanwhile, foreign governments have long subsidized the building and maintenance of their country’s fabrication plants. Some to the tune of billions. 

According to a 2020 report by the Semiconductor Industry Association (SIA) and based on the OECD’s (Organisation for Economic Co-operation and Development) 2019 Semiconductor Report, subsidies for the top foreign producers were broken down as follows:

China: $50 billion

South Korea: $26.7 billion

Japan: $5 to $7 billion

Singapore: $5 billion

Europe: $2.5 billion

Israel: $2.5 billion

Taiwan: $0.58 billion

These statistics don’t include tax incentives, discounted land, equipment incentives, workforce training, preferential loans, or hiring credits provided in each of these countries. None of which the U.S. offers its semiconductor manufacturers.

The CHIPS Act sought to change this. Delays in funding, however, are causing concern in among domestic chip manufacturers.

Is the Department of Defense’s ‘Microelectronics Vision’ Falling Out of Focus?

This June, as part of its response to the CHIPS Act, the Pentagon released its “Microelectronics Vision” report, outlining its commitment to mitigate escalating U.S. supply chain woes. The document came in the wake of last year’s formation of the Defense Microelectronics Cross-Functional Team (DMCFT) whose primary responsibility was to develop a “DoD-wide ME strategy that includes an implementation and transition plan for a sustainable U.S. [microelectronics] ecosystem . . . “

To carry this out, the DoD recently awarded $117 million to GlobalFoundaries (GF), one of the world’s leading semiconductor manufacturers. After an $8 million DoD award funded GF’s initial engineering baseline activities last year, GF is now scheduled to transfer some of its silicon-based semiconductor manufacturing processes to its Fab 8 facility in Malta, New York.

However, in a recent statement to Construction Dive, GlobalFoundaries hinted that the delay of CHIPS Act subsidies may waylay this plan. And they’re not the only semiconductor manufacturer who is concerned about the congressional delay in funding.

Manufacturers and Chip-Reliant Industries Concerned About CHIPS Act Delay

Beyond the government sector, other U.S. chip-reliant industries and manufacturers continue to grapple with shortages—with the auto, lighting, power, and consumer electronics industries most impacted. Awaiting relief through the CHIPS Act, these sectors are now also confronting Congress’s delay.

Responding to the situation, Intel CEO Pat Gelsinger recently halted the groundbreaking ceremony for the company’s Ohio mega-fab site. In his strongest statement to date on the matter, he warned that if Congress didn’t act soon, Intel would take its semiconductor manufacturing operations overseas.

Gelsinger goes on to cite the fact that European, Indian, and South Korean plants are 30- to 50-percent subsidized, while China’s semiconductor plants are subsidized up to 70 percent.

Gelsinger is not the only person to make this point. While at the World Economics Forum in Davos this May, U.S. Commerce Secretary Gina Raimondo spoke about the possibility of losing more U.S.-based semiconductor manufacturing. Following a recent trip to South Korea, where she and President Biden visited Samsung’s facility, she had this to say to CNBC: “Intel, Micron, Samsung – they’re growing. They’re going to build future facilities . . . If Congress doesn’t move quickly, they’re not going to build them in America. They’re going to continue to build them in Asia and in Europe, and we risk losing out on that.”

Will the Funding Delay Deter Asian Manufacturers?

Another major project awaiting CHIPS Act funding involves Taiwanese Semiconductor Manufacturing Company (TSMC), the world’s largest chip manufacturer. In 2020, they announced plans to build a $12B chip-fabrication plant in Arizona.

“TSMC has already begun their construction in Arizona, basically because of trust. They believe the CHIPS Act will be passed by the Congress,” said Ming-Hsin Kung, minister of Taiwan’s National Development Council, in a recent interview.

Kung added that the speed of construction will depend on CHIPS act subsidies.

Manufacturers Innovating to Mitigate Chip Shortage

While some organizations await subsidies, others are getting creative. In a widely circulated comment, Peter Wennink, CEO of the Dutch company ASML, noted that at least one unnamed conglomerate had resorted to purchasing washing machines—in order to salvage semiconductors for its products. Meanwhile, some car manufacturers are rewriting their codes to accommodate older-model chips. Even social enterprises, like PRIDE Industries, are innovating. Tasked with assembly, product testing, and supply chain management for a medical device company’s injury management system, PRIDE Industries got creative.

“We helped one of our medical device companies mitigate supply chain challenges by designing out a hard-to-source IC chip from their build, replacing it with a readily available, equivalent substitute,” said Tony Lopez, Vice President of Manufacturing and Logistics at PRIDE Industries.

Senators Weigh In

Against this backdrop, two senators are now weighing in. On July 6, Senator Andrew Brenner (R-Delaware) and Jay Hottinger (R-Newark) introduced a resolution, urging Congress to allocate CHIPS Act funding: Senate Concurrent Resolution 17.

“We have a serious shortage of computer chips needed to make everything from consumer goods to military equipment,” said Brenner. “Intel is poised to make Ohio a world-class chip manufacturing center, but we need Congress to fund the CHIPS Act in order to make this critical next step in our nation’s economic future.”

Further details on the resolution haven’t yet been released, but chip manufacturers are warning that without CHIPS Act subsidies, the U.S. will continue to fall behind foreign semiconductor manufacturers. And major players are now sending a direct message to Congress: Allocate funding or watch the U.S. chip shortage continue.

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To deliver top-notch electronics manufacturing, organizations rely on great tech, streamlined processes, and skilled assembly teams.

But from a customer perspective, how can you be sure of a vendor’s capabilities?

The Surface Mount Technology Association (SMTA) offers a certification that can help identify high-caliber talent. Known as the SMTA certification, or the SMT Process Engineer certification, it offers global recognition for engineering expertise.

To achieve certification, engineers are tested on:

  • SMT materials component placement
  • SMT components reflow soldering
  • Stencil printing wave soldering
  • Dispensing test and inspection
  • Line balancing (downtime, line design)

Understanding the Value of SMTA Certification

Experienced manufacturing and process engineers can become SMTA-certified.

Becoming certified “is unique, as it recognizes and certifies the entire SMT assembly process at an engineering level,” according to the SMTA website.

“My SMTA certification benefits me in a big way,” says Demi Laluan, an SMTA-certified engineer.

“I learned different types of printed circuit board (PCB) finishes and their application, chemistry aspects of SMT processes, stencil designs, machine capacity calculations, and others. All of these topics serve as my aid when resolving production issues.”

The certification helps engineers refine their skills while acquiring advanced knowledge.

“The biggest benefit I received from the certification is knowledge gained about SMT line balancing and line design,” says Thomas Bauer, an SMTA-certified engineer. “That is one manufacturing area I hadn’t previously explored in my career, so it was the biggest gain.”

From an employer perspective, certification helps level the playing field for assessing talent.

Customers, meanwhile, gain peace of mind in knowing that this pool of engineers has been coached by industry leaders.

Engineers who receive SMTA certification join a distinguished rank, with only 538 engineers certified worldwide, as of July of 2022.

SMT Process Engineer Certification at PRIDE Industries

Committed to best-in-class manufacturing, PRIDE Industries places talented engineers on SMTA courses. The engineers then apply this knowledge to customer projects, from electronics design to manufacturing services.

A team of engineers from PRIDE Industries—including Demi Laluan, Thomas Bauer, and Manager Andrew Williams—recently earned SMTA certification.

Their journey involved extensive studying, testing, and a completion of prerequisites. These include two-to-three years of experience in surface-mount technology. The engineers also understand process and systems steps, including calculations from screen printing and dispensing.

“Earning SMTA certification proves to customers that our SMT process capabilities are being governed by very skilled and knowledgeable engineers,” Williams says.

“When it comes to solutions for even the most complex PCB assembly, customers who use SMTA-certified partners can enjoy a high level of confidence.”

The SMTA certification offers a benchmark of excellence, ensuring high standards of service and knowledge.

“We’re very proud to be able to offer proven engineering expertise, as granted by the SMTPE certification,” Williams says. “Our customers know that it translates into higher-quality results, lower-cost service, and stronger partnerships.”

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“Earning SMTA certification proves to customers that our SMT process capabilities are being governed by very skilled and knowledgeable engineers.”

—Andrew Williams
Andrew Williams
Andrew Williams, Engineering Manager for Electronics Operations, PRIDE Industries

Can the U.S. supply chain be fixed?

Two bipartisan lawmakers think so—at least where printed circuit boards are concerned.

House Reps Anna G. Eschoo, D-Calif., and Blake Moore, R-Utah, are sponsoring the Supporting American Printed Circuit Boards Act of 2022 (HR 7677). At its core, the bill is designed to incentivize the domestic production of printed circuit boards (PCBs) and investments in related factories, equipment, workforce training, and research and development.

“The supply chain shortages for electronics are affecting every aspect of American life,” said Eschoo. “PCBs are a critical part of that supply chain. . .”

Eschoo also expressed concerns about the security vulnerabilities related to offshore production, stating:

The U.S. global production share of PCBs is only approximately four percent, compared to China’s 52 percent. . . If we want to ensure technological superiority across the global stage and strengthen national security, we need to bring PCB production back to America. . .

The bill is introduced as the world begins to emerge from the pandemic—an unprecedented scenario that found the transfer of products, including PCBs, come to a screeching halt. Quarantine mandates also merged with a higher-than-anticipated demand for hardware, resulting in shortages in both copper foils and aluminum—both used in the manufacture of PCBs. As a result, in late 2021, some reports cited PCB components were running more than 50 weeks behind schedule. In 2022, long lead times continue. So do rising costs—present whenever demand outweighs supply.

So far, to mitigate the impact of these dynamics, electronics manufacturing entities have had to be proactive and be innovative—strategies that Mike Douglas, General Manager of PRIDE Industries Electronics Manufacturing Operations, is no stranger to.

“Our manufacturing process has not been insulated from market dynamics brought about by the pandemic,” said Douglas. “So, we’ve been as proactive as possible—first, alerting our customers about the increasing scarcity of these critical components, then collaborating with them to implement solutions. This has often meant supporting product redesigns using more readily available materials.”

According to Forbes, redesign is trending throughout the electronics manufacturing industry. “To manage the current supply chain crunch . . . and mitigate long lead times and component shortages, redesign services are becoming a hot topic in the electronics industry,” writes Forbes Council Member Carl Hung.

Forbes goes on to note how redesign can be good for businesses and their customers, but it’s not always a viable solution. Writes Hung, “. . . some companies may not have the extra budget to invest in a redesign and would rather absorb the necessary longer lead time into their production schedules.”

But soon, redesign may become solely a matter of choice. If passed into law, HR 7677 will shorten lead times by bringing PCB manufacturing closer to home. The bill also seeks to:

 

  • Provide a tax credit for entities that purchase American-manufactured PCBs.
  • Establish a financial assistance program, modeled on the CHIPS Act, within the Commerce Department for American facilities manufacturing or researching PCBs.

The CHIPs Act, passed in June 2021, is to semiconductors what HR 7677 is to printed circuit boards.

“The CHIPS Act set the precedent,” said Tony Lopez, Vice President of Manufacturing and Logistics for PRIDE Industries. “For a robust electronics manufacturing sector here in the U.S., we need to see HR 7677 passed and implemented.”

Combined, the CHIPs Act and HR 7677 seek to return high-tech electronics manufacturing to the United Sates.

“The Supporting American Printed Circuit Boards Act will help usher in a new era of American manufacturing,” said Rep. Moore. “This bill will not only maintain the integrity of military and national security commercial materials, but it will also fuel the resurgence of American manufacturing through incentivizing the purchase and production of domestically-sourced printed circuit boards.”

In the meantime, PRIDE Industries’ Mike Douglas is quick to note, “The challenges are far from over. Our only remedy is to remain close to our customer, collaborate transparently, and look for alternative sources of supply.”

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When it comes to the soldering of printed circuit board assemblies (PCBAs), an inert environment is key

Why?

 

Soldering—with molten tin, copper, or silver alloys—is the primary method by which components are joined to a printed circuit board (PCB). When soldering takes place in ambient air, these metals are subject to oxidation. And oxidation results in soldering defects. To mitigate this, nitrogen gas may be plumbed up and around the soldering device’s nozzle, so that when it makes contact with the PCB, it does so in an inert atmosphere. But when a company stores liquid nitrogen onsite, it’s faced with issues of space, cost, and safety.

This is why, in 2019, PRIDE Industries purchased the Mikropor MNG-US-450 Nitrogen Generator—a decision that continues to prove sound.

Alleviating issues of space, cost, and safety

“Now there’s never a safety concern from a liquid nitrogen tank rupture,” said Andrew Williams, Engineering Manager for PRIDE Industries. “There’s not enough highly compressed stored nitrogen inside the building for this to happen.”

The MNG-US-450 is one of a series of nitrogen generators manufactured by Mikropor. According to this leader in atmospheric air filtration solutions, the MNG-US series generators employ a carbon molecular sieve (CMS) to “absorb oxygen and water vapor molecules under certain pressure while allowing nitrogen to pass through.”

Not only has this machine boosted safety and saved space, it’s also saved money. “Before the [nitrogen] generator, we had our nitrogen tanks refilled at a cost of $1,500 per month,” said Williams. “The amortized cost of the generator comes out to between $800 and $900 in monthly savings—immediately.”

Endless nitrogen supply

The generator’s on-site presence translates to an endless nitrogen supply—which, aside from eliminating the need for monthly refills, also puts an end to occasional emergency refills. “If, say, we used a ton of nitrogen more quickly than usual, we’d have to get a very expensive emergency delivery,” said Williams. “Now, we just continually make our own.”

The Mikropor MNG-US series boasts several features, including:

  • Simple structure, compact design, and fully automated operation.
  • The ability to replace manifold usage.
  • A touch screen PLC for controlling the complete system.
  • PLC screen/s for monitoring and visualizing the progress.
  • A rapid start-up and safety system.
  • Superior silencer design, providing low noise levels during depressurization and purge.
  • Durable piston valves for long-life operation.
  • On-demand production and low cost.
  • Consistent high performance.
  • Minimum maintenance cost. (*Replace filter element periodically only and service your compressor as normal.)

“Securing the Mikropor Nitrogen Generator has given us a consistent supply of high purity ‘Five 9s’ Nitrogen—99.999% pure, as demanded by the EMS industry,” said Williams. “This greatly reduces the associated costs and risks of using liquid nitrogen dewars.”

Cost savings and defect-free solder joints

Ultimately, of course, on-site nitrogen benefits customers in the form of savings and defect-free solder joints.

“It boosts our customers’ confidence,” said Mike Douglas, General Manager of Electronic Manufacturing Services for PRIDE Industries. “These are extremely complex PCBA designs being processed through our selective soldering equipment—of the highest quality—which converts to great customer satisfaction.”

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“Securing the Mikropor Nitrogen Generator has given us a consistent supply of high purity ‘Five 9s’ Nitrogen—99.999% pure, as demanded by the EMS industry.”

—Andrew Williams, Engineering Manager for PRIDE Industries

Generous donations to The Michael Ziegler PRIDE Industries Foundation support vocational training, on-the-job coaching, and a host of other employment services for adults with disabilities. The important services provided by these donations put hundreds of individuals, like Javier, on the path to reaching their career goals.

Congratulations to Francisco “Javier” Guzman, who recently earned a well-deserved promotion to production lead trainer in our Electronics Department.

An avid gamer, Javier was excited to join the department this past fall, as the position aligns so well with his interests. After excelling in a production worker role—and receiving training and mentorship—Javier applied for the production lead trainer position and was subsequently hired.

Not only do the technical aspects of the job interest Javier, but he also appreciates the opportunity to mentor other employees of all abilities. “I have often seen that many people with disabilities undervalue their abilities,” said Javier. “I have a learning disability, but my belief in myself helped me to get where I am today. Everyone has something that they are good at.” 

After attending Yuba Community College, Javier joined PRIDE Industries in 2015 as a production worker. In the role, he helped on a variety of kitting and packaging projects for customers like HP. Leading up to this point, Javier—like many young adults—hadn’t had a clear idea on what he wanted to develop as a career. But that was to change quickly.

“As soon as I started with PRIDE Industries, I immediately felt welcome,” said Javier. “I loved the opportunity to work on different projects .” Like other PRIDE Industries employees, Javier was given career advancement and job coaching by our staff to help him explore different job options and provide the training to help him succeed.  

And succeed, he did. Which is why, as of January, Javier is now in a role that finds him leading and training others.

“I’m excited for my first position where I will be directly responsible for managing the outcomes and success of my team,” said Javier. “I want others to see that if they work hard enough, they can achieve their goals.”

We are fortunate to have an inclusive team of talented employees, like Javier, that contribute to our company’s success. 

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Javier Guzman stands on the PRIDE Industries production floor.

“I have a learning disability, but my belief in myself helped me to get where I am today. Everyone has something that they are good at.”

From alerting custodians when a garbage can is full to monitoring human vital signs, IoT technologies continue to play a growing role in multiple industries. This is especially true in the field of electronics manufacturing, where these technologies are now used in everything from machinery maintenance to remote device programming.

hand of business man using smart phone with sustainable energy icons on blurred nature background

The growth of IoT has been fueled by multiple factors. New 5G and cloud technologies have sped up data transfer so that connected devices can respond more quickly. Sensors have become more efficient and less expensive. And advances in neural networks and other forms of AI have made IoT systems both more robust and easier to manage.

 

Specifically in electronics manufacturing, IoT-connected machinery allows entire systems to work seamlessly together, making it easier to monitor quality and modify maintenance work in real time. IoT technology speeds up the process of identifying procedural gaps and the need for upgrades in equipment. 

When it comes to data management, IoT enables manufacturers to communicate instantly with customers and stakeholders. This, in turn, makes the sourcing of raw materials and the tracking of inventory more transparent. It also shortens production times and improves overall performance rates.

 

With today’s cloud technologies, all accrued data is easily accessible to those who need it. This means that despite the well-known energy requirements of IoT systems, the gains far outweigh the costs. According to one forecast, IoT will “save more than eight times the energy it consumes by 2030,” while driving a reduction in C02 emissions and water usage. Perhaps the best news of all, where IoT meets electronics manufacturing, is the cost savings generated by this technology’s myriad applications—from pinpointing sources of product damage to identifying large-scale supply chain trends.

From smart homes, to smart cities, to smart businesses and industries, ElectronicDesign.com affirms IoT’s proliferation, noting that early-adopting companies will gain an edge: “IoT is ready for exponential growth this year, boasting robust technology and a thriving ecosystem.”

 

Mike Douglas, General Manager for PRIDE Industries Electronics Manufacturing Services, notes these specific uses of IoT within electronics manufacturing operations:

smart trashcan with sensors on street
  • Asset tracking throughout the supply chain. Through the use of attached sensors, IoT-enabled asset management keeps organizations aware of their assets’ information, minimizing the need for human effort.
  • Predictive maintenance. Via real-time, constant monitoring of equipment and tools, gathered data enables businesses to predict, plan, and prepare for equipment failure or malfunction before it occurs. And, because this maintenance can be performed while equipment is operating, business disruptions are avoided.
  • Inventory management. Sensors attached to each item allow businesses to easily keep track of their precise locations, reducing the time it takes to locate inventory. Moreover, real-time accrued data, gathered via sensors and software, provide key insights when it comes to tactical business decisions
  • Digital work Instructions. By translating procedures into a “human-centered” way of working and by providing real-time data about product status, digital work instructions improve throughput and turnaround time, mitigating bottle necks and constraints—all driving improvement in productivity, quality, and safety.
  • Supply chain optimization. By linking demand signals with available supply, SCO seamlessly ensures continuity of goods supporting the manufacturing process. IoT technology is also able to monitor goods throughout the shipping process, enhancing communication between suppliers and buyers.
  • Capacity optimization. The availability of real-time data, as to work-in-process status, enables enrichment of capacity optimization tools.
  • Facility management. From lighting and HVAC control and monitoring to measuring building occupancy, IoT technology can save money while upgrading health and safety measures.

 

Though IoT has been around for awhile now, its applications will greatly expand through 2022 and beyond, with wide adoption across industries. To maintain a competitive edge, the electronics manufacturing industry will need to remain cognizant of new uses and their potential benefits.

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