MANORANJAN (MONTY) MOHANTY, SVP and lead client partner, Genpact and JOHN WAITE, vice president, global supply chain, Genpact
President Biden signed the CHIPS and Science Act of 2022 in August, with $280 billion earmarked “to encourage the construction of microprocessor manufacturing facilities in the United States,” strengthen American manufacturing and supply chains, create jobs, and invest in R&D. Now, the semiconductor industry must prepare to put that funding to work.
The CHIPS Act will bring focus to research, product development, manufacturing capability, and jobs for America — but it goes beyond that. The core of the semiconductor industry is a broad ecosystem of innovative companies advancing research, intellectual discovery, complex materials, and techniques of immense complexity — all operating within a complex global supply chain driven by advanced analytics. The Act represents a once-in-a-generation opportunity to propel the entire value chain, including semiconductor manufacturers, integrated device manufacturers, fabrication plants, foundries, fabless manufacturers, suppliers, distribution and infrastructure companies, data storage providers, and R&D.
There will be a waiting period before the billions in subsidies and investment in tax credits are available for U.S. semiconductor production and research; and nuances will certainly need to be figured out, including which companies will get the funding and over how many years. But now is not the time to take a wait and see approach. Organizations must be ready to act once the funding and bidding opportunities for valuable contracts start to flow.
Securing funds demands supply chain transformation
The supply chain networks of semiconductor companies could use the money. These networks are highly complex and riddled with inefficiencies. In addition, U.S.-based semiconductor companies have for decades relied on international providers (many based in Asia) for their supply requirements. Many international providers could deliver supplies more cheaply due to lower labor costs in their countries, which has been one of the main drivers of U.S. reliance on offshore suppliers. But to take advantage of CHIPS act tax breaks and bidding opportunities, organizations will need to identify and select U.S.-based suppliers. This will require them to completely transform their supply chain networks and processes, a daunting task for any organization. It will also require employee training, reskilling and talent acquisition investments.
Positioning for success: 4 ways companies can overcome global supply challenges
Fortunately, automation technologies — supply chain management software, digital workflow, and manufacturing planning solutions — can help keep supply chain costs down and enable employees to focus more time and energy on innovation. End-to-end visibility platforms, advanced planning, and decision support tools can deliver efficiencies that accelerate design, manufacturing and distribution processes. Organizations can also take advantage of learning, training and talent solutions as they transform and position their workforce for success, which will be critical for companies to take advantage of these new growth opportunities.
