US Congress Proposes Support for American PCB Manufacturing
Throughout 2021 and the first half of 2022, semiconductors and parts shortages were getting all the attention in the news media. Semiconductor component shortages are important and they certainly impact things like prices for end products, as well as the ability for companies to stay competitive. However, the risks in the semiconductor supply chain pale in comparison to the risks in the bare board and assembly supply chain.
Now that the US government officially recognized the critical importance of domestic PCBA production in a February 24 report, some began to question whether that recognition would translate into any kind of policy shift.
On May 6, that policy shift was finally announced through the introduction of bipartisan legislation by Reps. Anna G. Eshoo (D-CA) and Blake Moore (R-UT). The new legislation, named the Supporting American Printed Circuit Boards Act of 2022, is aimed at supporting the US PCB industry through multiple subsidies and incentives intending to encourage private investment.
Whether the new legislation will make it to President Biden’s desk is debatable, especially in the current polarized political environment and given how the CHIPS act has languished for nearly 2 years.
The new legislation is intended to address several of the challenges facing the industry, including those outlined by IPC, the DHS/DoC joint report referenced above, and industry associations like the Printed Circuit Board Association of America (PCBAA). Some of the proposed incentives in the legislation include:
- Creation of a tax credit supporting the purchase of printed circuit boards manufactured in the United States.
- Investment in R&D focused on automation and modernization of US PCB manufacturing operations.
- Investment in workforce training and education programs intended to nurture the PCB manufacturing knowledge that has been depleted over the past two decades.
- In total, $3 billion in proposed funds are to be made available to support domestic PCB manufacturing capacity.
The bill was received warmly by IPC President and CEO Dr. John Mitchell, who described the bill as “address[ing] vulnerabilities in a key segment of the electronics manufacturing value chain” and the bill “prioritizes innovation, resiliency, and innovation across the electronics industry.” Dr. Mitchell has been vocal about the supply chain situation since the start of the COVID-19 pandemic; take a look at the recent podcast episode between Dr. Mitchell and Judy Warner.
This legislation follows on the heels of the PCBETTER Act, introduced in Congress on April 28, 2021 and was later signed into law by President Biden. This bill also focuses on securing the PCB supply chain and incentivizes modernization efforts, but only for circuit boards that would be used in products that are critical to national defense. Additional requirements for testing and qualification of foreign-supplied circuit boards, requirements for reporting the use of foreign circuit boards, and the creation of an Electronics Supply Chain Trust Fund available to the Secretary of Defense were included in the PCBETTER act.
The current legislation is much different, focusing on direct allocation of funding to important parts of the PCB manufacturing industry. The direction of the provided funding is consistent with the points identified in the IPC’s Leadership Lost report. How that funding will be used and the effectiveness of a $3 billion sum remains to be seen, especially when we consider the huge hurdles to overcome. According to the IPC report, the US share of global PCB production was 30% in 2000, yet it has fallen to only 4% over the past two decades.
Moving back in the direction of 30% market share is a lot of ground to make up. Critics of the legislation will immediately notice the differences in the dollar amounts being proposed to support semiconductor manufacturing compared to PCB production. The size of the current round of PCB funding is only $3 billion dollars, meanwhile the US Senate passed its version of the CHIPS Act with a price tag of $52 billion. In terms of dollars allocated to support PCB domestic manufacturing of electronics assemblies, the current legislation could best be described as paltry.
Although the price tag is low, the current legislation takes the view that domestic manufacturing is a national security issue. In fact, the term “national security” is used multiple times in the text of the legislation. The fact that legislators are viewing domestic manufacturing capacity as being related to national security is a major shift in perception, but it is warranted given the fragility of global just-in-time supply chains. Whether this will make a big difference in the landscape for American manufacturers and help create more resiliency in the PCB supply chain is debatable, but it is a step in the right direction.
As important developments like these continue to affect the electronics industry, Altium will be there to bring you important insight and analysis of these trends. Our mission is to help all designers be successful and navigate these turbulent times with the best software, data, and resources. Start your free trial of Altium Designer + Altium 365 today to get access to the industry’s best design and supply chain tools.