CHIPS Act, good as it was, doesn’t fully enable a domestic supply chain

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When the federal CHIPS Act was passed last year, there was much celebration, and we are now seeing federal funding flowing to the state and local levels. The U.S. Department of Commerce designated Wisconsin and Minnesota as national tech hubs. Huge tech companies like Foxconn and Microsoft made major investments in the region.

However, when you look below the surface to see where all microelectronics come from, the CHIPS Act doesn’t address the entire supply chain. We depend almost entirely on Asia for most of the components that semiconductors need to function.

The COVID-19 pandemic was a wake-up call for manufacturers of everything from F-150s to F-35s. Consumers and lawmakers learned that we don’t make enough chips to support American-made products. Congress rang the alarm bell and created the CHIPS Act based on the fact we make only 12% of the world’s supply of semiconductors. This makes us vulnerable to supply chain disruptions caused by either political decisions or natural disasters in distant countries. Violence against ships in chokepoints like the Red Sea and the earthquake in Taiwan are reminders of how fragile long supply chains are.

The situation with printed circuit boards (PCBs) is even more dire than semiconductors. Even though America led the world in PCB technology, our PCB market has shrunk from 30% to 4% of the world’s supply over the past 30 years. Without PCBs to carry them, the components, or chips, do not function.

Often mistaken for simple green pieces of plastic, PCBs are complex and precisely engineered, forming the central nervous system enabling the semiconductor “brain” to control the function of an electronic system. Many necessities in modern life, from air conditioners to defense and space systems, could not function without PCBs.

In Minnesota, Chaska-based manufacturer Pro-Tech Interconnect Solutions is the only 100% woman-owned-and-operated rigid printed circuit board producer in the United States. It builds boards in markets for aerospace, agriculture, aviation, automotive, military, medical and lighting, as well as commercial and industrial controls.

Just across the border in Prescott, Wis., TCLAD Inc. is the only U.S. company that develops and manufactures IMS (insulated metal substrate) materials and circuits used in thermal management of high-power PCBs. The 200 men and women of TCLAD have been producing materials used in complex electronic systems, power modules and component packages for more than 30 years.

The CHIPS Act created funding and attracted investment for chips, but without concurrent support for increased domestic sources of PCBs and substrates, most of those new “Made in America” chips will be shipped across the world for advanced packaging with foreign-made PCBs. We don’t solve the supply chain problem by only addressing part of the ecosystem.

Despite the commitment of companies like Pro-Tech and TCLAD, the U.S. simply does not produce enough PCBs and base materials to create a secure, trusted and resilient domestic supply chain. We are too dependent on distant countries for PCBs and other materials that power the electronics that run our country.

We appreciate what Congress did in the CHIPS Act to provide the initial investment that in turn attracted private investment for the semiconductor industry. It means jobs and prosperity for Wisconsin and Minnesota. But, without similar action for PCBs, the country’s continued dependence on foreign countries puts at risk an uninterrupted supply of trusted and secure PCBs and their associated critical materials.

To nurture and grow the entire microelectronics ecosystem, we call on Congress to pass H.R. 3249, the Protecting Circuit Boards and Substrates (PCBS) Act. The PCBS Act calls for a 25% tax credit for companies buying American made PCBs, along with a $3 billion investment in related research and development, physical plant, and workforce development efforts.

It’s time to finish the work the CHIPS Act started and level the playing field for American companies. The PCBS Act will help achieve our national goal of a secure, trusted and resilient national microelectronic supply chain. Our national and economic security depend on it.

Melanie Bera Anderson is CEO of Pro-Tech Interconnect Solutions in Chaska. John Hauschild is managing director of TCLAD in Prescott, Wis. Travis Kelly is chairman of the Printed Circuit Board Association of America and CEO of Isola Group in Chandler, Ariz.