President Biden Invokes Defense Production Act for PCB Production

When President Biden signed the CHIPS and Science Act into law on August 9, 2022, the industry was generally happy about the new legislation. Plans went into place quickly to invest in new fabs using grants from the roughly $280 billion in new funding that had been allocated to boost domestic research and manufacturing of semiconductors in the United States. Almost all the main companies in the industry got together to applaud the act. However, there were a few voices that, while not being critical, were mentioning that there is a lot more to the electronic industry than semiconductors. No matter how important that ICs are, they still have to be soldered onto a board or fitted on a module to be of any use. Is there much point in having the largest semiconductor design and manufacturing industry in the world if those chips had then be sent overseas to be turned into anything useful?

If the president really wanted to bring the whole of the electronics supply chain back from overseas, then there were more aspects of the industry that would have to be considered. These stages include component design and PCB design and population and potentially a few more functions. 50% of PCB manufacture is done in China. The country also has town-sized manufacturing plants to populate those PCBs and turn them into products. After Apple and Samsung, the third largest electronics company in the world is Hon Hai Precision Industry, which is best known for building iPhones and other consumer products for Apple.

Now, six months after the original CHIPs act was passed into law, the US government has made a start on other areas of the industry, for some purposes anyway. This week, President Biden signed a presidential determination (PD) authorizing the use of Defense Production Act to support the nation’s domestic PCB and advanced packaging industrial base. The PD is intended to allow the Department of Defense (DoD) to utilize its Defense Production Act (DPA) Title III authorities to invest in advanced microelectronics capacity. President Biden’s Executive Order 14017 on “America’s Supply Chains” prioritized the need to support and advance the domestic PCB and Advanced Packaging industrial base to addresses strategic vulnerabilities to U.S. military readiness and challenges to American economic competitiveness.

“The rapid changes occurring within the microelectronics industry make it imperative for the Department of Defense to ensure that this critical sector can support the nation’s defense needs. The Presidential Determination will allow the DoD to use additional tools to ensure the resilience of American microelectronics manufacturing,” Anthony Di Stasio, Director of the Manufacturing Capability Expansion and Investment Prioritization (MCEIP) office. “We are committed to working with our interagency partners to expand the microelectronics domestic industrial base in the United States.”

The PD allows the DoD’s Office of Defense Production Act Investments (DPAI), which is part of the Office of the Under Secretary of Defense for Acquisition & Sustainment (A&S), to leverage DPA Title III incentives, including purchases and purchase commitments, to support the PrCB and Advanced Packaging industrial base.