Mid-March Highlights

How SMBs can benefit from the US CHIPS act

On the face of it, President Joe Biden’s CHIPS act looks like a feast for big business, ready salted with large amounts of subsidies. But small businesses can also benefit from the Federal Government’s big spending.

The US government has put together a $50bn package to fund the “reshoring” of semiconductor manufacturing. This comes after the pandemic exposed the US’s reliance on overseas semiconductors, leaving automotive manufacturers in particular short of vital semiconductor parts as demand soared worldwide.

Biden’s bill aims to stimulate domestic chip manufacturing to avoid that happening again. But building semiconductor fabrication plants or “fabs” that make the chips is notoriously expensive. The estimated cost of a fab starts at around $1bn and runs to a possible $4bn. But the White House is promising that SMBs can also benefit. How will this happen?

The CHIPS Act (Creating Helpful Incentives to Produce Semiconductors) is likely to help small electronic manufacturers in several ways:

• Funding: The CHIPS Act provides $11bn of funding for research and development of semiconductor technology, which SMBs can access to support their own R&D.

• Access to technology: As domestic semiconductor production increases, SMBs may gain greater access to the latest technology, which can help them develop new products and services and improve their competitiveness.

• Enhanced supply chain security: The CHIPS Act aims to improve supply chain security by reducing the risk of supply chain disruptions and delays.

• Increased demand for products and services: As domestic semiconductor production increases, there may be increased demand for products and services that rely on semiconductors, which can benefit SMBs that operate in related industries.

Why exporters should keep a close eye on opportunities in India

Many North American SMBs can testify to the fact that India has traditionally been a tough market to crack for exporters. That might be about to change.

Underneath a cloak of neutrality, India is quietly aligning its economy towards the West, the WSJ reports. There are several signs Delhi is opening its economy, which include:

• Trade deals it is negotiating with Canada, the UK, EU, Australia, and UAE.
• India using its presidency of the G-20 to contrast itself favorably as a trading partner compared to China.

India has a long and proud tradition of favoring home-made products. Immediately after independence the “Swadeshi” movement encouraged Indians to buy locally wherever possible. It has traditionally tried to protect domestic manufacturers through some of the highest tariffs of any major economy wherever possible. And this tradition has intensified under PM Narendra Modi, who launched a “Make in India” campaign to further prioritize local manufacturers.

India’s average “most favored nation” tariff in 2021 stood at 18.3% — up from 2014.

India’s industry minister Piyush Goyal told the WSJ that India would “love” to discuss a free-trade agreement with the US. Potential exporters would do well to take note. According to OECD figures India is currently the world’s fifth largest economy and is set to overtake the US economy by 2048.

Reserve Bank of India (RBI) deputy governor Michael Patra even said last August that he believed India could achieve that feat by 2031. Currently a trade deal with the US lacks political support but that could change as India’s economy grows and as the fruits of trade deals with countries such as Canada and the UK, the US become apparent. Watch this space.

US funding sustainable transport links in Thailand

The US Trade and Development Agency (USTDA) is funding the Thai Ministry of Transport as it looks to improve Thailand’s supply chain and reduce C02 in its freight transportation system, Port Technology International reported.

The USTDA is seeking initiatives within Thailand to aid in the decarbonization of freight transport. The agency wants to “provide opportunities for US companies to participate in one of Southeast Asia’s most significant clean transportation initiatives”.

Initially the agency plans to identify infrastructure, technology, and operational improvements within Thailand’s intermodal transportation system that can benefit from funding. Stakeholders such as consumers and investors are increasingly calling on companies to reduce emissions in their supply chains. SMBs sourcing from Asian destinations such as Thailand are under pressure from customers, therefore, to demonstrate they are decarbonizing freight links.

“This project will reduce carbon dioxide emissions, improve road safety, and increase the efficiency of Thailand’s transportation infrastructure,” said USTDA Director, Enoh T. Ebong, Port Technology International reported.

“Our partnership with the Ministry of Transport will support Thailand’s efforts to establish itself as a regional transportation and logistics hub.”

According to data from the United States Census Bureau, the total value of U.S. imports of goods from Thailand in 2021 was approximately $27.7bn – up 6.8% from 2020.

Some of the major US imports from Thailand in 2021 were:

• Computer and electronic products, with a total value of approximately $10.2 billion.
• Miscellaneous manufactured commodities, with a total value of approximately $2.9 billion.
• Non-electrical machinery, with a total value of approximately $2.3 billion.
• Textiles and textile products, with a total value of approximately $2.2 billion.

Thailand’s close proximity to key rubber producing countries like Malaysia make it an essential exporter of electronic goods for US and Canadian SMBs.

It is also a key logistical gateway in the increasingly important Southeast Asia region.

We at Ship4wd are dedicated to helping small and mid-sized businesses get the most out of their shipping processes. Regardless of their experience in logistics, business owners can count on us to get their shipments to where they need them.