On June 8, 2021, the Senate passed the U.S. Innovation and Competition Act (USICA), a $250 billion bill designed to boost the U.S. technology industry, primarily semiconductor chip production and supply. The USICA came out of the remains of the Endless Frontier Act, a bipartisan bill intended to combat international competition in various tech markets, most notably aimed at China. In its current version, the USICA is focused mainly on the semiconductor industry with $49.5 billion allocated over five years for the CHIPS for America Fund, which includes $19 billion in the 2022 fiscal year (including a $2 billion legacy chip production funding plan) and $5 billion each year thereafter until 2026. The remaining $10.5 billion is dedicated to Commerce programs, including the National Semiconductor Technology Center (NSTC), National Advanced Packaging Manufacturing Program, and other R&D programs.
This bill is of particular interest to the auto industry, which has long supported funding the CHIPS for America Fund. All of the automotive manufacturers are struggling with the current chip shortage. Electric vehicles have been impacted disproportionately owing to increased semiconductor needs. General Motors Co (GM.N), Ford Motor Co (F.N), and Toyota Motor Corp (7203.T) have all cut production this year due to the shortage. Last month, Ford warned the chip shortage could cut second-quarter production by nearly 50% (costing Ford $2.5 billion in 2021).
WIT’s Electric Vehicles Expert team includes several auto and chip supply chain specialists, who advise that the chip shortage will likely extend into 2022. Any relief offered by the USICA would take months, if not years. WIT continues to see litigation over supply chain disruption and expects the patent portfolios owned by international market players to become more significant as government funding boosts formerly small players.