Deciphering the Presidential Determination
On March 27, 2023, U.S. President Biden issued a presidential determination that, IPC states, “prioritizes the domestic development of printed circuit boards (PCBs) and advanced packaging, including IC substrates, under Title III of the Defense Production Act (DPA).
IPC welcomes this action, but what does this really mean? IPC vice president of global government relations, Chris Mitchell, joins Nolan Johnson to clarify what a presidential determination is, what it means to both the industry and individual companies.
IPC’s Chris Mitchell, vice president of global government relations, explains the March 27 Presidential Determination for Printed Circuit Boards and Advanced Packaging.
Nolan Johnson: Hi, Nolan Johnson here for Real Time with… I-Connect007, and I have the pleasure of speaking with Chris Mitchell. He is the vice president of global government relations for IPC. Chris, welcome.
Chris Mitchell: Thanks, Nolan. It's always great to be with you.
Johnson: On Monday this week, March 27, IPC put out a press release welcoming the U.S. presidential determination prioritizing domestic development of printed circuit boards and IC substrates. That's pretty newsy.
Mitchell: Yes, it was. A big development and one that's been—quite frankly—a long time in coming. We're exuberant that it was issued on Monday and it's notable that it came out, really, on the heels of an announcement on Friday, while the president was in Canada that the U.S. would be committing, through the Defense Production Act, $50 million for the strengthening of the U.S. PCB and advanced packaging industries.
Johnson: How is a determination different from an executive order?
Mitchell: First, the Defense Production Act, over its 70-plus year history, has evolved in order to allow the president and the U.S. government to more broadly address any number of Industrial Base issues. In this case, the president issued a presidential determination. This comes through in the form of a memorandum to the secretary of defense. And it is the president's mechanism for, one, identifying an Industrial Base need as a strategic national priority in the interests of our nation's defense. And in addition, providing exemptions to certain requirements that many industries under the Defense Production Act program would normally need to meet in order to secure the kind of benefits and opportunities that that the program can afford. I think what we see in this presidential determination is, at the very highest levels of the U.S. government for the first time—at least in recent history—an affirmation that the printed circuit board industry is of significant strategic importance to the nation. By designating the industry as having that strategic national importance, it then gives the industry the ability to leverage the Defense Production Act to ramp up production and innovation.
Johnson: Now, this is the first time that's coming from the president himself. However, there has been quite a bit of activity in the past few months that have telegraphed this.
Mitchell: Yes. But clearly the government's been preparing for this. The Defense Department is not alone, but certainly taking the lead in helping to provide a greater level of support for the industry given the significant vulnerabilities that exist.
Johnson: How do you see this affecting the CHIPS Act and any subsequent legislation following behind, such as a new version of last Congress's HR 7677?
Mitchell: I think in the short term it gives the executive branch greater ability to leverage the Defense Production Act to inject support into the industry. And it's all those funding opportunities will not necessarily just come from the Defense Department, but again, it gives those executive branch agencies another mechanism as they gain a much better appreciation for the ecosystem that supports electronics manufacturing in the United States, in order to make sure that that they're directing funding toward those industries. That's on the executive branch side.
On the legislative side, I think that there is still some question—especially in this very kind of partisan environment—about what can get done. What we are seeing is that members on both sides of the aisle have a much greater appreciation for this electronics manufacturing ecosystem, a much greater appreciation for the need to build up the U.S. PCB and EMS industry. as well as key segments of the advanced packaging industry as well. That's great news and I think there are a number of mechanisms that they can be using in order to demonstrate that support.
You referenced the PCB bill that was introduced last year. We are working with the authors to make tweaks to that bill and to have that reintroduced. But again, this is a very tough legislative environment, and we need to look at all opportunities. That includes the appropriations process to make sure that this presidential determination, which has just been announced, is actually well funded through the congressional appropriations process. That's another avenue of advocacy that we are pursuing and working with members to make sure that, as they make their appropriations priorities clear for the coming year, this is on their list and that we're engaging the Appropriations Committee and staff, in order to underscore the importance of making sure that this presidential determination has the funding behind it to ensure that we're able to achieve the goals we've set.
Johnson: Let's just put ourselves in the place of someone in the executive suite at a PCB fabricator, one of the smaller organizations in the U.S. How does this change our perspective? What does this mean to us?
Mitchell: It's a great question and this is where engagement with the DPA office becomes really important. The DPA office will need to make decisions about how they intend to implement this presidential determination. Our hope is that this will be implemented in such a way that it affords opportunities to companies of all sizes, but it is going to require significant engagement on each company's part to understand what opportunities will be made available and to be in a position to respond to those opportunities. Of course, at IPC, we'll be monitoring this. Our intention is to make sure that the industry is kept abreast of important developments related to the implementation of this presidential determination and, in fact, we're working with the DPA office right now to create an opportunity for them to speak directly to industry and share more details about the presidential determination and their plans for its implementation.
Johnson: So, keep an eye on what IPC is doing, there just may be some additional communication channels.
Mitchell: The short answer is yes, but don't stop there. The fact is that there are a number of federal agencies that have a high interest in our industry and you should be finding opportunities to engage with those officials and to understand how the programs they're implementing make great opportunities for you, your company and the industry. I would just underscore the point that this is huge for our industry, not just because of what it means through this specific presidential determination. But even more broadly, the fact that those who are in positions within government to really support the industry are now gaining a much greater understanding of why it is important to take action now. We're confident that while this is one of the first significant steps that government is taking, it will not be the last.
Johnson: Thanks for the insight, as always.
Mitchell: Thanks, Nolan.
Johnson: Here with Chris Mitchell. I'm Nolan Johnson. This is Real Time with… I-Connect007. Thanks for listening.