The United States Innovation and Competition Act (USICA): A Primer
Tom Lee, Juan Londoño
Executive Summary
The United States Innovation and Competition Act (USICA) is a $200 billion proposal aimed at countering China’s influence domestically and abroad.
USICA has gained bipartisan support and has been labeled as “must-pass” legislation, but the negotiation process has resulted in the inclusion of amendments and provisions that deviate from the bill’s original goal.
The bill proposes an expanded role for the federal government in “strategic sectors” – including semiconductors, drones, wireless broadband, and artificial intelligence – with increased funding, supervision, and regulation of various industries.
"From the DoD's perspective, they're highly dependent on [Asia] for fabrication and packaging [of chips]," Hudson Institute's Bryan Clark tells Breaking Defense. This has led to DoD calls to address a "fragile and threatened" chip supply chain.
The legislation would also include significant federal incentives to enhance tech R&D at American universities and institutions over the next five years.
The Senate will take up this legislation beginning this week. The House will consider similar legislation. Any bill that eventually makes its way to the White House would likely be some combination of the two.
Meanwhile, President Joe Biden has already asked Congress for $50 billion to fund the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act, which would use federal money to build more chip manufacturing capacity in the US.
The Semiconductor Industry Association (SIA) warns that the US share of global semiconductor manufacturing capacity has decreased from 37% to 12% since 1990. This is primarily due to government subsidies in other regions and stagnation in federal investment.