Concerns over Semiconductor Supply Chain Prompt Request for Public Comments

3 min

Comments are now sought by the U.S. Department of Commerce (Commerce), Bureau of Industry and Security (BIS), through its Office of Technology Evaluation for information and data necessary to assess the capabilities of the U.S. microelectronics industrial base in its support of national defense, and in light of the global nature and interdependence of the supply chain. See Notice, 86 Fed. Reg. 14308 (Mar. 15, 2021). The request for input follows President Biden's executive order (EO 14017), which directs several federal agencies to submit reports within 100 days identifying supply chain risks, in such industries as semiconductors, high-capacity batteries, rare-earth elements, and pharmaceuticals. See Venable's Client Alert.

The secretary of commerce (Secretary) is required to prepare a report identifying supply chain risks and to propose policy recommendations. Therefore, the data obtained here will assist the Secretary in assessing the capabilities of the U.S. microelectronics industrial base and list those areas of critical technology impacted by potential disruptions in production, as well as gaps and vulnerabilities in the microelectronics supply chain. This is also consistent with the requirement for the government to secure the semiconductor-related supply chain in the National Defense Authorization Act of 2021 (FY21 NDAA).

The Secretary is particularly interested in information and comments addressing the following:

  • Critical and essential goods and materials underlying the semiconductor manufacturing and advanced packaging supply chain;
  • Manufacturing and other capabilities necessary to produce semiconductors, including electronic design automation software and advanced integrated circuit packaging techniques and capabilities;
  • Availability of key skill sets and personnel necessary to sustain a competitive U.S. semiconductor ecosystem, considering domestic education, workforce skills, skill gaps, and opportunities to meet future workforce needs;
  • Risks or contingencies that may disrupt the semiconductor supply chain (e.g., defense, cyber, climate, geopolitical), to include risks posed by reliance on digital products and those resulting from underdeveloped domestic manufacturing capabilities, including emerging capabilities;
  • Factors impacting supply chain resilience and capacity to support national and economic security and emergency preparedness, such as
    • Manufacturing or other needed capacities, including ability to modernize;
    • Gaps in manufacturing capabilities;
    • Location of key manufacturing and production assets and risks due to physical location;
    • Exclusive or dominant supply of critical or essential goods and materials by nations that are, or may be, hostile or unstable;
    • Availability of substitutes or alternative sources for critical or essential goods and materials;
    • Need for research and development capacity to sustain leadership;
    • Current workforce skills and education, identified gaps, opportunities, and potential best practices;
    • Role of transportation systems in supporting the semiconductor supply chain and risks associated with these transportation systems; and
    • Risks posed by climate change to the availability, production, or transportation of goods and materials critical to semiconductor manufacturing;
  • The potential impact of failure to sustain or develop elements of the semiconductor supply chain in the United States on other key downstream capabilities, including, among others,
    • Supercomputer development;
    • 5G infrastructure;
    • Election security; and
    • Purchases of finished products by downstream customers and,
  • Policy recommendations or suggested executive, legislative, regulatory changes, or actions (for example, involving reshoring, near-shoring, and building redundancy into supply chains).

If your business is involved in or impacted by the semiconductor manufacturing and advanced packaging supply chain, your experience is solicited. Comments, whether public or business confidential, are due on or by April 5, 2021.

We continue to monitor developments associated with the administration's supply chain review. If you have questions regarding how this may affect your business, or if you are interested in submitting comments, please reach out to Venable's International Trade Group for guidance.