SIA, IPC see benefits in American Recovery and Reinvestment Act
The Semiconductor Industry Association and the IPC agree that the Recovery Act will encourage growth for electronics industry through investments and tax cuts.
By Gail Flower, Contributing Editor -- EDN, February 24, 2009
After much debate in both chambers of Congress, the American Recovery and Reinvestment Act was signed into law last week. Although the act’s intent is to provide $787 billion to prime the pump for the US economy overall and includes federal tax cuts, expansion of unemployment benefits, and spending on education and healthcare, the package includes a number of incentives to encourage semiconductor industry growth, including $11 billion in funding to support development of an electric smart grid.
According to the SIA (Semiconductor Industry Association) some of the benefits for the country as whole for smart grid will come in phases. The first phase is the ability of home meters to communicate back to the grid as to usage, eliminating physical inspections and cutting cost. The second phase is two-way communication when the grid can send data to users, offering differential pricing over time. For example, consumers can do laundry when rates are cheaper and adjust to demand. In phase three, the utility has the ability to adjust appliances. For example, the utility remotely adjusts lighting intensity by a small amount during peak periods. At a later point, this interrelates with solar and wind energy, currently a small but growing part of energy generation.
Another phase contains the potential for widespread adoption of plug-in hybrids and electric cards, according to the SIA. Cars with batteries could be charged during low demand points. These same vehicles can provide energy back to the grid during peak demand. Being able to distribute energy efficiently, is part of smart grid usage, the SIA explained. Any time smart semiconductors transfer information, sensors and communications are included, as well. The demand for chips is broad based.
“The ubiquity of semiconductors in the renewable energy, energy efficiency, and smart grid applications that President Obama is promoting as part of his energy policy spells opportunity for SIA members,” said Daryl Hatano, VP of public policy at the SIA. “Any time you hear ‘smart’ before an application such as smart homes, smart appliances, or smart grid, you can bet that there are semiconductors that enable that intelligence. Semiconductors have the potential to revolutionize the energy sector much as they have enabled the personal computer, cell phone, and Internet to revolutionize our economy and society over the last two decades.”
Other electronics organizations see benefits for their members in the act. The IPC--Association Connecting Electronics Industries has said that its members will benefit from the bonus depreciation tax incentives, the carry back of net operating losses, and other tax incentives included as part of the act’s Research and Experimentation tax credit. That credit is scheduled to expire in 2009, but the IPC plans to push for it to continue.
“Bonus depreciation permits businesses to recover the cost of capital expenditures faster than the ordinary depreciation schedule would allow,” said Anthony Hilvers, VP of industry programs for the IPC, in a statement. “In order to compete globally, the market demands that companies in the electronic interconnection industry continuously invest in capital equipment to remain competitive in producing state-of-the-art electronic products.”
