The COVID-19 pandemic exposed the global supply chain for its weaknesses, and manufacturers of all sizes continued to be impacted by supply disruptions through most of 2022. Finally, we're beginning to see signs that the supply chain is on the mend, at least for most of the larger medtech companies.
Meanwhile, world leaders continue to work toward more long-term solutions. For example, the Wall Street Journal reports that the Biden administration is turning to India for help as the United States works to shift critical technology supply chains away from China and other countries that it says use that technology to destabilize global security. According to the report, Administration officials met with a delegation of Indian officials and U.S. industry executives this week. The discussions centered around technology development and investment in India as part of a broader U.S. push to cultivate alternatives to China.
One of the biggest wins for medtech in 2022 was the CHIPS and Science Act (Creating Helpful Incentives to Produce Semiconductors for America Act) President Biden signed into law in August, opening access to more than $50 billion in research and manufacturing of semiconductor chips. The bill is intended to help the country regain a leading position in chip manufacturing by bringing more facilities back to the United States, which will help lower costs and prevent supply disruptions.
The law will invest $39 billion over five years to expand domestic manufacturing, providing companies incentives to build, expand, and modernize facilities and equipment. Additionally, it creates a new 25% tax credit for companies that invest in semiconductor manufacturing equipment or the construction of manufacturing facilities. However, private companies that receive financial assistance will be restricted from expanding certain chip manufacturing in China for 10 years.
By September 9, Biden was visiting a groundbreaking of a new semiconductor chip manufacturing plant in Ohio that Intel is building with the help of the new law.
Of the public medtech companies that have already reported quarterly earnings for the most recent quarter, most (but not all) are at least cautiously optimistic that supply chain pressures will ease in 2023.
Click through the slideshow to see what executives at GE Healthcare, Stryker, Boston Scientific, Intuitive Surgical, and Abbott said about the current state of the supply chain.
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