Sparking Innovation: How Federal Investments in Semiconductor Research Strengthen America’s Economy and Tech Leadership

by David Isaacs, Vice President, Government Affairs

Increased federal investments in semiconductor research have outsized benefits for the U.S. economy, according to a new report commissioned by SIA. The report, titled “Sparking Innovation: How Federal Investment in Semiconductor R&D Spurs U.S. Economic Growth and Job Creation,” demonstrates federal investments in semiconductor research provide outstanding value to the taxpayer and should be a priority for policymakers interested in generating economic growth and maintaining U.S. technology leadership.

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According to the report, each additional dollar invested in federal semiconductor research increases U.S. gross domestic product by $16.50. This figure likely understates the full benefit to the economy, as it is derived from the benefits to the computer and electronics sector only. Given the pervasive role of semiconductors in enabling innovation throughout the economy, the actual benefit is likely to be higher. The report also finds substantial increases in semiconductor research and related fields would add $161 billion to GDP over five years and add 500,000 jobs to the U.S. economy.

Another finding of the report is that federal semiconductor research investments stimulate additional investments by the private sector. The semiconductor industry in the U.S. currently invests approximately 20 percent of revenue into R&D – among the highest percentages of any sector – totaling nearly $40 billion in 2019. Unfortunately, federal investment has remained relatively flat as a percentage of GDP, while private sector research investment has increased nearly 10-fold. Increased federal investments would lead to even greater private investments.

In 2019, SIA issued a policy blueprint, Winning the Future, that calls for substantially increasing federal investment in semiconductor research and related fields. These increases are needed for the U.S. to win the global race for technology leadership and reap the economic and security benefits that result from such leadership.

Advances in semiconductor technology have a positive impact on the entire economy and nearly every major sector, including automotive, telecommunications, agriculture, biomedical, and national defense.  To maintain U.S. technology leadership in the face of growing global competition, Congress should significantly increase semiconductor research and research in related fields.