IPC Global Advocacy Report

1/7/2022

Dear IPC Members:

I hope you had a restful holiday season and a safe start to 2022. This week’s Global Advocacy Report is a snapshot of how we’re working to advance your success via IPC advocacy, with a look back at 2021 and a look forward to 2022.

IPC Reports Calls for U.S. Government Investment in Advanced Packaging and PCBs

If the U.S. government (USG) wants to achieve greater innovation, resiliency, and security in the semiconductor supply chain, its investments in semiconductors must be paired with robust, multibillion-dollar investments in advanced packaging of chips and especially in advanced IC-substrates.

Those were among the key findings of a recent IPC report, which made 28 recommendations to address gaps in industry capabilities and capacity in North America. We hope you’ll take the time to check it out and share it with your networks.

Another IPC report is coming soon on longstanding gaps in the printed circuit board (PCB) sector and why PCBs deserve much more supportive USG policy.

These IPC reports come as the Biden administration continues to call for increased funding of semiconductors through the CHIPS Act, which passed the U.S. Senate in June. IPC supports the CHIPS Act, but we’re concerned that without investment in other parts of the electronics ecosystem, the United States remain unable to manufacture the cutting-edge electronics it designs. We will continue to beat this drum in 2022.

Current Conditions for the Electronics Supply Chain Remain Challenging

IPC’s latest reports on the industry’s sentiment and the global economic outlook suggest that many electronics manufacturers continue to struggle with a challenging environment.

According to IPC’s January Global Sentiment Survey, nine in 10 electronics manufacturers report rising materials costs, and more than three-fourths reporting rising labor costs. Tight profit margins are expected to continue through at least the first half of 2022, and the trajectory of the economy will closely follow the trajectory of the COVID pandemic. Meanwhile, supply chain shortages continue to hamper production levels, and lead-times remain long.

For more on what might lie ahead, be sure to check out IPC Chief Economist Shawn DuBravac’s Monthly Economic Outlook Report.

DoD Updates to CMMC Will Benefits SMEs

In a June IPC report, nearly one-quarter (24 percent) of electronic manufacturers said the costs and burdens of compliance with the Cybersecurity Maturity Model Certification (CMMC) may force them out of the U.S. Department of Defense’s (DoD) supply chain.

On November 4, the DoD unveiled a much-anticipated update to CMMC — now called CMMC 2.0 — which aims to minimize compliance barriers by reducing costs, particularly for small businesses. CMMC 2.0 also seeks to clarify and align cybersecurity requirements to other federal requirements and commonly accepted standards. Given the many concerns that were raised about CMMC 1.0, these common-sense changes are a big improvement.

Meanwhile, recent reporting has signaled that the DoD is also considering offering financial or certification incentives to get contractors to reach CMMC compliance before CMMC 2.0 goes live. We will update you as the DoD’s plans finalize, and you can read more in this IPC blog from cybersecurity expert and IPC Thought Leader Leslie Weinstein.

U.S. Defense Missions Depend on Completing Lead-Free R&D

The U.S. defense and aerospace community’s reliance on outdated electronics designs is creating an opportunity for our rivals to surpass U.S. technology in the coming years. With lead-based electronics becoming more difficult and expensive for the Department of Defense (DoD) to procure, it is imperative that we complete the transition to lead-free. The lead-free research funding level is due to be decided in Congress within the coming weeks. Read a recent op-ed by IPC member David Raby in AL.com for more on this issue here.

Meanwhile, the U.S. Partnership for Assured Electronics (USPAE) was the recent recipient of an $8.95 million award from the DoD to grow the Defense Electronics Consortium (DEC) and expand its work on the Solder Performance and Reliability Assurance Project. Follow USPAE on LinkedIn or reach out directly to them if you have any questions.

Dynamic Environmental Policy Landscape Expected in 2022

The EU and U.S. regulatory agendas are crowded with chemical and product policies that will affect electronics manufacturers in 2022.

In Europe, IPC expects revisions to the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) regulation, a review of the Restriction of Hazardous Substances (RoHS) Directive, and legislative action on the Sustainable Products Initiative.

In the United States, we anticipate consultations on Toxic Substances Control Act (TSCA) risk evaluations and on the risk management of existing chemicals. IPC’s environmental advocacy team will be busy monitoring and engaging on these topics for you in 2022. Please let us know if you have any questions.

Ramped Up Activity at U.S. EPA

Here in the United States, the U.S. Environmental Protection Agency (EPA) has been receptive to our concerns.

IPC, alongside our peer groups CTA and ITI, recently coordinated on a joint response offering industry support for the EPA’s proposed compliance deadline for phenol, isopropylated phosphate (3:1) – PIP (3:1) – a chemical substance used as a flame retardant and plasticizer in electronics. The joint comments also reiterated several requests for clarifications and exemptions for uses of PIP (3:1). In 2021, IPC engaged with industry members and the EPA to ensure a reasonable plan for a future prohibition of the manufacture and distribution of PIP (3:1) and articles containing this chemical substance. We would welcome your insights and engagement on this issue.

Another issue that the EPA is grappling with is the likely regulation of per- and polyfluoroalkyl substances (PFAS). Most recently, the agency released a strategic roadmap on how it intends to regulate the chemical by 2023. The roadmap signaled that companies should be prepared to provide data and information about the usage of PFAS, which has uses in electronics products and processes.

On December 8, U.S. President Joe Biden signed an Executive Order (EO) that sets environmental policy goals for the federal government to achieve by 2050. In one key area, the EO directed the federal government’s procurement efforts to prioritize “the purchase of sustainable products, such as products without added PFAS.” However, some PFAS are used to make electronics purchased by the federal government. This is an opportunity for the electronics industry to educate policymakers about the widespread use of PFAS, the risks associated with those uses, and the tradeoffs associated with trying to identify and implement safer alternatives.

IPC Advocates for Transatlantic Cooperation on Resilient Supply Chains

IPC recently made the case for a resilient electronics manufacturing ecosystem and further investments in advanced packaging at the inaugural meeting of the European Commission’s consultation on secure supply chains. IPC welcomed the transatlantic focus on secure supply of semiconductors under the U.S.-EU Trade and Technology Council (TTC) and plans to submit additional comments to the commission on this issue. IPC will continue to engage with policymakers to ensure the electronics value chain is recognized as central to economies on both sides of the Atlantic.

How Can Government Help or Hurt You in 2022?

As we plan our GR activities for the year, we want to know how the IPC Government Relations team can best advocate for you now and in the future.

Throughout 2021, we asked IPC members about the key challenges they are facing. Allison Budvarson of Renton, WA., noted that trade and tariffs are "leading to component supply issues" and are having "a very real effect on my ability to ship product." Does this issue affect you? Let us know your top concerns via this five-minute, five-question survey.

IPC to Hold Virtual IMPACT Washington, D.C.

By the way, IPC’s signature U.S. advocacy event – IMPACT Washington, D.C. – will take place in March. We had hoped for an in-person IMPACT, but due to current uncertainties about the COVID pandemic and the new omicron variant, policymakers are not expected to be taking meetings with large groups at that time.

Help Us Help You and Your Industry Colleagues!

Although 2021 was a difficult year for many of us, we look forward to continuing to work with IPC members and policymakers to advance policies that promote increased innovation, investment, and growth in electronics over the coming decades.

Please let me know if you have any questions and suggestions for IPC advocacy in 2022. With your engagement, we can achieve more victories for the entire electronics manufacturing industry.

All the best,

Chris Mitchell
Vice President, Global Government Relations

Meet the IPC GR Team

Whether it’s engaging with policymakers in Washington, D.C., in the European Union or in China, the IPC Government Relations (GR) Team proactively seeks opportunities to educate, inform and influence policymakers on policies that spur innovation, growth and competition, while protecting human health and the environment. But our success depends on your support and engagement. Learn more and get involved in IPC advocacy today! IPC Contact: Chris Mitchell.

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