We hope that the “Supporting American Printed Circuit Boards Act of 2022” is passed through Congress in the upcoming session with little or no partisan roadblocks. At first glance, the reporting that surfaced regarding this piece of legislation notes potential detours could emerge are via revisions of the draft to encompass a larger subset of the PCB supply chain. This is to be welcomed if those stakeholders are vociferous enough to cement changes that benefit the entire PCB industry, encompassing fabricators, raw material producers, technological innovators, and OEMs.
So, let us cautiously assume that an iteration of the bill passes through Congress and lands on the President’s desk. The real work will commence with dollars distributed across the country. There needs to be a critical mass towards this lifeline; yet we carry fiduciary responsibility to the American citizen—our industry should never remain in need of perpetual bailouts like many others in recent memory. This is not a pet or pork barrel project. Before jumping to this end point, we need to take some time and carefully examine the proposal in its current form, highlight key components that directly affect PCB manufacturers and, if we may be forward, make suggestions that will increase the likelihood of success and harness the full value of taxpayer investment.
The Bill Itself-
It starts off with a bang: “…For the purposes of section 38, the credit determined under this section for the taxable year is an amount equal to 25 percent of the cost paid or incurred by the taxpayer for the purchase or acquisition of printed circuit boards manufactured in the United States for the taxable year”. This is a welcome respite to the PCB buyer, even with the Section 301 tariffs of Chinese imports still in place. While this policy assisted US manufacturers to some extent, the low-cost PCB fabricators throughout Asia (not named China) remain untouched by tariffs. Furthermore, all two- and four-layer boards imported from China remain exempt from this, as well. While we do not have the percentage breakdown, anecdotal evidence tells us that most of the PCBs used are double sided (two layer) and four layer in everyday production, leaving this levy without teeth. This newly proposed tax credit levels the playing field on all PCB types and from all players that are not located within the US. Our take: This is a logical step and welcomed by PCB manufacturers, as we are often faced with command economies subsidizing fixed and variable costs, upending any true competitive landscape. This credit may not entirely close the price gap, but OEMs, contract manufacturers and design studios may be willing to “on shore” some production with this incentive, contributing to the domestic growth of the electronics industry while maintaining their profit margins-sounds like a win-win.
Section 3. Incentives for Printed Circuit Board Manufacturing and Research and Development addresses the competitive gaps most domestic shops currently face: training, technology and vocational education.
Training and education are critical to industry growth, propelling innovation with new, fresh eyes and minds. Without the necessary equipment and infrastructure, these new ideas and advanced designs face an uphill battle when being considered due to old, aging technology. This component of the bill allocates financial assistance to “incentivize investment in facilities and equipment in the United States for manufacturing or research and development of printed circuit boards”. The language included throughout this section gives a wide berth to the types of proposals that will be accepted by the Secretary of Commerce. A clause also refers to a “larger investment”, whereby financial support awarded is capped at $150,000,000 unless the “Secretary [of Commerce], in consultation with the Secretary of Defense and Director of National Intelligence, recommends to the President, and the President notifies Congress, that a larger award is necessary to” fabricate circuit boards that are necessary for national security. Our take: The language contained within this section is pithy and direct; the authors of this bill realize that a reckoning is on the horizon. Domestic PCB shops have been ignored, devalued, and overlooked by the public and private sectors for far too long. Most domestic shops cite $3-5 million dollars as a game changer, let alone upwards of $150 million. A realistic cap of $15-20 million per facility should be more than sufficient, allowing for a wider disbursement among existing facilities and maintaining a diverse manufacturing landscape. A large bulk of the funding should remain for raw material infrastructure (mentioned in detail below), which is critically underfunded. This is a welcome change in attitude towards the US PCB industry, but the bureaucratic red tape must be minimized when applying for these funds to ensure expediency.
We suggest that the proposal be reviewed to include appropriations and incentives for domestic material suppliers; without a steady stream of dependable raw laminate, inks, chemistry, hardware, the investment in capital equipment, training and education will be for naught. The last two-plus years have shown the fragility of the international supply chain and, much like the exodus of US based PCB manufacturers, domestic material suppliers/manufacturers have gone by the way of Asia. This bill must contain a concise program to re-shore many of these raw material suppliers back to the US, as some products have ceased to be produced domestically altogether.
As discussed, the current proposal contains welcomed attention and potential investment to our industry. Being neglected for the last few decades decimated this once US dominated industry—it will take an effort such as this to secure a foothold back into the competitive electronics manufacturing landscape. There is no doubt that our national and economic security are at stake. Contact your local Congressperson, requesting they vote “yes” on this bill for a safe, secure, and prosperous United Sates.
H.R.7677 – 117th Congress (2021-2022): Supporting American Printed Circuit Boards Act of 2022, H.R.7677, 117th Cong. (2022), https://www.congress.gov/bill/117th-congress/house-bill/7677/all-info.