Public Policy

On February 4, the U.S. House of Representatives passed the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (COMPETES) Act by a vote of 222-210. The bill was introduced on January 25 as the House companion to the Senate’s USICA.

Autumn promises to be a busy season of policy developments on a host of issues that could significantly help – or harm – the chip industry in the United States.

On June 8, the White House released its report directed under the February 24 Executive Order 14017 to secure America’s supply chains. Among those critical products, the Department of Commerce conducted the review of semiconductor manufacturing and advanced packaging.

On April 21, 2021, the European Commission put forward the long-awaited Proposal for a Regulation on a European approach for Artificial Intelligence, introducing for the first time harmonized rules for the development, placement and use of secure and ethical artificial intelligence (AI) in Europe. The proposed regulation’s wide scope subjects providers, importers, distributors, and users of AI systems to regulatory scrutiny. It also includes providers and users outside of the European Union (EU) that deploy AI systems or use AI system outputs in the EU. With extraterritorial scope, the proposed regulation aims to further strengthen the EU’s leadership in shaping global standards and norms for new technologies. A European Path to Safe AI Following a risk-based approach, the proposed regulation classifies AI systems according to the level of danger they pose in the following categories: Unacceptable risk: AI poses unacceptable risk to systems or applications with the potential to manipulate human behavior and exploit vulnerabilities of groups of people to cause psychological or physical harm. Examples of prohibited AI systems include social-scoring systems and biometric identification that can be used by public authorities. High risk: The proposal identifies two main categories: AI systems used as safety components of products (or are a product themselves), and other stand-alone AI systems that have fundamental rights implications. Considering their intended purpose, the proposal identifies specific conformity assessment measures for both groups. AI systems intended to be used as security components will require a conformity assessment by an independent third party. Such systems will also be subject to the same ex-ante and ex-post compliance and enforcement mechanisms as products of which they are part. In contrast, stand-alone AI systems assessed through internal checks would require ex-ante compliance with all requirements of the regulation as well as with robust standards for quality and risk management and post-market monitoring. The proposed regulation identifies eight areas of high risk including AI systems in safety components of products (e.g., machinery, radio equipment, AI applications in robot-assisted surgery), critical infrastructures (e.g., transport), educational and vocational training (e.g., exam scoring) and employment (e.g., monitoring or evaluation of persons in work-related contractual relationships). Prior to their introduction to market, high-risk AI systems will be a subject to strict requirements including the use of high-quality datasets; adequate risk assessment and mitigation systems; high levels of robustness, accuracy, and security; clear and adequate user information; detailed system documentation and logging of activities to ensure traceability of results. Human oversight and control must be ensured. Low and Minimal risk: For limited-risk AI systems (e.g., chatbots), the regulation proposes only minimum transparency obligations, while minimal risk AI systems posing little to no risk (e.g., AI in spam filters) will not be regulated. Boosting AI Excellence from Lab to Market Continuous innovation of AI requires a secure environment that can support responsible validation of AI technologies. To that end, the proposal encourages the set-up of testing and experimentation facilities or so called AI regulatory sandboxes. Established by one or more Member States, the sandboxes will provide a controlled environment to test innovative technologies under strict oversight before their market introduction. These facilities could play an instrumental role in connecting the Europe’s R D ecosystem, creating new partnerships among numerous stakeholders. In addition to regulatory sandboxes, the European Commission intents to set up: A Public-Private Partnership (PPP) on AI, data and robotics designed to implement and invest in strategic research innovation and a deployment agenda for Europe Additional Networks of AI Excellence Centers to foster exchange of knowledge and advance collaboration with the industry Testing and experimentation facilities to test state-of-the-art technology Digital Innovation Hubs, one-stop shops to provide access to technical expertise and experimentation An AI-on-demand platform as a central European toolbox of AI resources (e.g., expertise, algorithms, software frameworks and development tools). Next Steps The proposed regulation is the at the start of a lengthy legislative process and will be debated by the European Parliament and European Council in the coming months. Given the importance of AI, and number of stakeholders involved, it is likely the proposed regulation will face various changes before being applied across the EU. For its part, SEMI Europe will maintain discourse with key public and private stakeholders on the proposed regulation, closely monitoring related policy developments as they unfold. Marek Kysela is senior coordinator of Advocacy at SEMI Europe.

As the Biden administration begins to advance its policy goals through U.S. government agencies, SEMI is eager to work with these new officials and appointees to advance innovation and strengthen U.S. leadership in the microelectronics industry. SEMI President and CEO Ajit Manocha today sent a letter to Commerce Secretary-Designate Gina Raimondo advocating for strengthening American manufacturing, investing in research and development and pursuing multilateral rather than unilateral U.S. export controls. SEMI also “requests Commerce perform a comprehensive review of recent policies and formally seek industry input via publication of a Notice of Inquiry (NOI), giving industry its first formal opportunity to provide its views on these significant regulations.” The letter discusses the importance of how export controls are implemented, advocating that “multilateral controls – where items of concern are controlled by all major producing nations – create a level playing field, maximize effectiveness, and minimize harm to U.S. national security and economic competitiveness. Unilateral U.S. controls over items for which there are comparable non-U.S.-origin items are generally ineffective in supporting national security goals and are likely to erode any technological advantages enjoyed by U.S.-origin items.” Foreign availability of semiconductor manufacturing equipment, materials and design software is an important consideration for U.S. export control policy related to those items. In an appendix to the letter, SEMI provided charts detailing the foreign availability of major types of semiconductor manufacturing equipment and materials. For nearly all items, there are competitive alternatives to U.S.-origin items available from non-U.S. sources. With many semiconductor technologies concentrated in a handful of key exporting nations, the letter encourages a unified approach via a plurilateral export control regime instead of unilateral U.S. controls for these technologies. SEMI provided a framework of issues that need to be considered and properly addressed in negotiating a plurilateral agreement related to semiconductor industry export controls. The previous administration created several unilateral controls that were implemented with little or no opportunity for public or industry comment and which created several unintended consequences. In addition to the request to publish an NOI, the letter asks Commerce to correct unintended controls related to the August 2020 expansion of EAR General Prohibition Three and reduce the backlog of license and classification requests. SEMI is pleased to work with the U.S. Department of Commerce and other policymakers by providing industry data, trends and perspectives to ensure export controls effectively serve national security interests without undue harm to technological development and leadership in this dynamic, globally competitive industry. Kimberly Ekmark is director of Public Policy and Advocacy at SEMI.

Over the next five years the Taiwan government plans to invest NT$1.546 billion to build the workforce direly needed for future semiconductor industry research and development. The largesse is a tribute to efforts by SEMI president and CEO Ajit Manocha to enhance the competitiveness of the semiconductor industry by stressing the importance of talent development during his annual visits with the Taiwan president. He has been instrumental in bringing together Taiwan government agencies and local industry representatives – two players in developing the talent pool of the future – to discuss workforce initiatives.As the talent gaps threatens to choke the long-term growth potential of the chip industry, Manocha has emerged as a passionate champion of workforce development. In a letter to more than 2,000 semiconductor companies worldwide, he urged to executives act together to build the workforce vital to industry growth. In 2018, he met with Taiwan President Tsai Ing-wen to discuss ideas for attracting and retaining skilled workers to help ensure Taiwan remains a top investment destination for high-tech multinationals.In early 2019, SEMI Taiwan established its SEMI Taiwan Workforce Development Council to promote talent and career development. Already, the group’s work is resonating in the global semiconductor industry. In September last year, Manocha joined executives from industry heavyweights ASE, MediaTek and TSMC in a visit to President Tsai to urge the government to pursue industry sustainability through talent development. President Tsai responded by instructing her staff to review government resources available for talent development, help drive public-private dialogue and partnerships, and form talent development projects involving the government, industry, academia and research institutes.To carry out comprehensive workforce initiatives, SEMI Taiwan continues to work with the National Security Council and the Executive Yuan (the cabinet). We also launched the Semiconductor Industry Development Council in partnership with leading high-tech companies in Taiwan including ASE, TSMC, MediaTek, PSMC, VIS, MXIC, Nanya, Etron and UMC. Focused on developing semiconductor talent and technology, localizing equipment sourcing, and improving cybersecurity, the council has formed the following seven initiatives: Make existing government talent development programs more flexible to better meet the industry’s workforce needs. Recruit outstanding scholars and leading experts in scientific research, and solicit world-class scientific research teams. Extend age restrictions and other requirements for the Einstein Program (established by the Taiwan MOST, Ministry of Science and Technology) to attract outstanding foreign scholars to Taiwan. Establish a domestic semiconductor research ecosystem and provide sufficient research funding to cultivate R D talent. Strengthen female education in STEM (science, technology, engineering, mathematics) and encourage women to re-join the workforce to help meet the industry’s workforce needs. Continue to promote MOST University-Industry Collaboration Projects (Large Alliance) to connect the upstream academic and research sector with downstream industries. Encourage cooperation between science and technology universities and the chip industry to develop the talent necessary for smart manufacturing to thrive. SEMI’s advocacy efforts with the Taiwan government, the industry and academia are clearly paying off. The Executive Yuan recently announced three major talent development strategies – expanding the talent development capabilities of higher education institutions, promoting industrial-academic cooperation and encouraging businesses to strengthen recruiting efforts and increase funding for semiconductor talent development.The building momentum includes plans by the Taiwan Ministry of Education plans to establish semiconductor technology research centers at several national universities. By passing the sandbox law and loosening regulations organizational personnel, finance and education, the government is freeing up more funding to support semiconductor industry talent development. The ministry also plans to gradually expand the number of students enrolled in STEM curriculum and continues to promote talent training programs and recruiting strategies to help close the workforce gaps and reduce related industry risks. A highly skilled workforce is indispensable to the development of the semiconductor industry and among the most strategic resources in any region. It’s only through long-term partnerships between the government, industry and academia that impactful and sustainable workforce development goals and initiatives can be developed to help the chip industry realize its full potential to innovate and solve some of the world’s greatest challenges. The programs are key to the ability of Taiwan’s semiconductor industry to sharpen its competitive edge. More importantly, they are also the center of gravity in the region’s pursuit of its position as the global semiconductor hub. Jo-Ann Su is senior director and Winnie Chang is marketing and public relations specialist at SEMI Taiwan.

As the United States government has expanded semiconductor-related export controls, companies in the global electronics manufacturing and design supply chain have had to spend considerable time and effort navigating restrictions and managing significant new uncertainties emanating from recent policies. On November 9, SEMI submitted comments to the Department of Commerce’s Bureau of Industry and Security (BIS) urging the agency to proceed cautiously and adopt regulatory best practices and microelectronics industry recommendations to ensure that its identification of foundational technologies does not restrain U.S. innovation and exports without furthering essential U.S. national security interests. The comments specifically respond to the August 27 Advance Notice of Proposed Rulemaking (ANPRM), Identification and Review of Controls for Certain Foundational Technologies. The Export Control Reform Act (ECRA) of 2018 required BIS identify certain emerging and foundational technology that is “essential” to U.S. national security and requires such technology to be controlled to China and other nations subject to a U.S. arms embargo. Congress did not provide a specific definition for emerging or foundational technology, nor the term essential, further complicating the process to identify such technology.BIS has already implemented or proposed several emerging technology controls and the ANPRM starts the process to identify potential foundational technology controls. The SEMI comments focus on the fundamental question of how to define foundational technology, and are organized into three main sections: Requirements of ECRA Guidance from ECRA Regulatory best practices and industry recommendations Applying the statutory requirements and guidance, together with best practices and recommendations, to the identification of foundational technology indicates that most semiconductor-related technology, particularly semiconductor manufacturing equipment and materials, should be outside the bounds of the foundational technology initiative. In general, most technology related to semiconductor devices, manufacturing equipment, materials and design software is not essential to U.S. national security and, in cases where such technology does present material national security issues, it is generally subject to the U.S. list review process and multilateral controls. This technology is widely available outside the United States and due to substantial foreign availability, unilateral U.S. controls on such technology are likely to be ineffective in limiting its proliferation and harm U.S. development of or threaten U.S. leadership in this technology.While the SEMI comments focus on the effort to identify foundational technology, the recommendations and best practices apply in all export control contexts. Several of the statements pertain to policy in ECRA, including its imposition of controls to further specific essential U.S. national security interests only after full consideration of their impact on the economy.Other statements derive from factors ECRA requires BIS to consider, such as not seeking to control technology that’s already available outside the U.S. and not imposing controls that would harm U.S. technological development or leadership. An additional key factor is not imposing controls before multilateral controls are agreed to, nor when it is unlikely the relevant multilateral regimes will adopt similar controls, as is likely for technology that has been decontrolled by a regime.Finally, regulatory best practices suggest that technology-based controls should not be imposed when more targeted end-use or end-user controls can address national security concerns and duplicative controls in addition to recent, significant expansions of existing controls are unnecessary.SEMI is pleased to work with the U.S. Department of Commerce and other regulatory agencies, providing industry data, trends and perspectives to ensure export controls effectively serve national security interests without undue harm to technological development and leadership in this dynamic, globally competitive industry.Ways to Stay Connected and Learn MoreSEMI is committed to serving the global electronics manufacturing and design supply chain and present the collective voice of members to governments worldwide.The SEMI Global Update weekly newsletter provides updates on advocacy issues and technology trends and is available to all.Additionally, SEMI hosts live and virtual events that offer analysis and insights of geopolitical trends by industry experts, with the next opportunity to participate coming on December 3 with the SEMI CEO Webinar: Analyzing the Impact of the U.S. Election on the Microelectronics Industry.Joe Pasetti is Vice President of Global Public Policy and Advocacy at SEMI.

On 21 September, SEMI and a coalition of 40 industry organisations sent a letter to European Commission President Ursula von der Leyen calling for decisive action to solve implementation issues within the European Union Waste Framework Directive, specifically the Substances of Concern in Products (SCIP) database.The signatories, who represent a very significant part of the European economy, are requesting urgent resolution of implementation issues for the SCIP database, which is designed to support the circular economy as defined in the European Green Deal. The database is required under Article 9.1 of the updated Waste Framework Directive.In the letter, the signatories ask President von der Leyen to take immediate action to: Postpone the SCIP notification deadline of 5 January 2021 to at least one year after finalization of the database; Conduct a study on the usefulness, feasibility, proportionality and impact of the database; Instruct the European Chemicals Agency (ECHA) to adapt the SCIP database according to the outcome of the proposed study. ECHA failed to complete development of the database by the January 2020 deadline required by the Waste Framework Directive, leaving companies insufficient time to develop, test and adapt their own systems to meet the January 2021 SCIP notification deadline.Over the last two years, the signatories have repeatedly shared their serious concerns regarding the viability, proportionality and value of the SCIP database with the European Commission and the ECHA, yet those concerns remain unresolved.Contrary to the EU Better Regulation principles that call for open and transparent decision making, Article 9.1 was added to the revised Waste Framework Directive during the final stage of the co-decision process without any prior stakeholder consultation or impact assessment. A proper impact study should help shape the way forward to deliver on the EU ambition of driving a circular European economy.Coalition PartnersEmir Demircan is director of Advocacy and Public Policy at SEMI Europe.

SEMI President and CEO Ajit Manocha has voiced his support for amendments the United States House of Representatives and Senate included in the Fiscal Year 2021 National Defense Authorization Act (NDAA) that would authorize important programs to support semiconductor manufacturing and research in the U.S.“SEMI is very pleased the House and Senate included in the NDAA provisions to support semiconductor manufacturing and research in the United States,” Manocha said. “The U.S. has not kept pace with the growth of semiconductor manufacturing abroad. The U.S. share of global semiconductor manufacturing capacity has been cut in half to just 12 percent over the past 20 years and is forecast to fall to 10 percent by 2023. We applaud the sponsors for their support, leadership and hard work to win House and Senate approval to increase federal government support for the industry. However, this is just the start of what needs to be done to reverse this 20-year decline. The CHIPS for America Act’s investment tax credit for new and expanded semiconductor manufacturing facilities is essential to provide a robust, transparent and reliable federal incentive that will be the foundation of renewed growth of U.S. fabs.”In addition to authorizing a new grant program, the House and Senate amendments would direct the Defense Department to create programs with the private sector to: Direct the Defense Department to create programs with the private sector to encourage the development of advanced, measurably secure microelectronics, Establish a Multilateral Microelectronics Security Fund the U.S., its allies and partners will use to reach agreements promoting consistency in their policies related to microelectronics, Direct the President to establish a subcommittee on semiconductor technology and innovation within the National Science and Technology Council, and Direct the Secretary of Commerce to establish a national semiconductor technology center and other important new programs. The House amendment would authorize an additional $1.2 billion for semiconductor research. Both the House and Senate are expected to complete debate and pass the NDAA bills this week.SEMI members operate semiconductor supply chain facilities across the U.S. Of the 25 states with at least one major facility, 18 boast large semiconductor manufacturing fabs and other facilities while seven offer semiconductor equipment and materials production. Operating for decades, many of these facilities are key pillars of local economies and underpin hundreds of small businesses that supply components and materials. The U.S. semiconductor supply chain accounts for about 240,000 high-skill and high-wage jobs nationwide.Joe Pasetti is Vice President of Global Public Policy and Advocacy at SEMI.

On June 20, President Trump signed an executive order (EO) suspending the issuance of H-1B, H-2B, J-1 and L visas for applicants residing outside of the United States without an active work permit. The order took effect today and will be in force through the end of 2020. The suspension of H-1B and L-1 visas, in particular, likely will impact negatively the ability of U.S. companies in the semiconductor manufacturing supply chain and the broader technology community to recruit and retain global talent and to temporarily transfer international engineers and executives to support critical operations in the U.S.According to the administration, the issuance of visas for skilled temporary workers into the U.S. poses a “significant threat to employment opportunities for Americans affected by the extraordinary economic disruptions caused by the COVID-19 outbreak.” Although SEMI fully supports administration efforts to address economic disruptions and job losses caused by the pandemic, we believe blanket restrictions on high-skilled immigration will be counterproductive to government and industry initiatives supporting a broad-based economic recovery. Semiconductors are the foundation of all electronics and information technology (IT), enabling innovation and growth in countless other industries including medical devices and the IT solutions that enable remote work and the connectivity desperately needed in current economic times. Access to global engineering talent and the worldwide mobility of technology executives are central to supporting the industry’s efforts to contribute to economic recovery in fields ranging from healthcare and telecommunications to transportation infrastructure.The EO authorizes the Secretaries of State, Homeland Security and Labor to establish criteria for exceptions to the blanket ban, including employment categories that: are critical to the defense, law enforcement, diplomacy, or national security in the U.S. provide medical care to currently hospitalized COVID-19 patients provide medical research at facilities to help the U.S. combat COVID-19 are necessary to facilitate the immediate and continued U.S. economic recovery The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) has classified workers in the semiconductor supply chain as essential to the effective operation of critical economic activity as the nation addresses the economic fallout of COVID-19. In lieu of rescinding the total ban on visa applications, SEMI urges the Secretaries to incorporate the CISA guidelines for semiconductor supply chain workers as they assess categories for application exceptions. SEMI will continue to advocate for programs and policies that enhance U.S. economic competitiveness, including immigration rules that ensure the U.S. can attract and retain the highest skilled talent from around the world without compromising employment opportunities for U.S. workers. As Senate Judiciary Chairman Lindsey Graham noted following the issuance of the EO, “Legal immigration is a positive for the American economy, and visa programs allowing American companies to secure qualified, legal labor throughout the world have benefitted economic growth in the United States.”Karl Kailing is manager of Public Policy and Advocacy at SEMI.