In September, chip giant Intel gathered officials at an estate near Columbus, Ohio, where it commit to invest at least 20 billion USD in two new factories for semiconductor production.
A month later, Micron Technology celebrated the opening of a new manufacturing site near Syracuse, NY, where the company makes chips. expected to spend 20 billion USD by the end of the decade and eventually perhaps five times that number.
And in December, the Taiwan Semiconductor Manufacturing Company held a shindig in Phoenix, where they planned to triple investment to $40 billion and build a second new factory to make advanced chips.
The pledges are part of a massive ramp-up in US chip production plans over the past 18 months, the size of which has been likened to Cold War Investments in the Space Race. The boom has implications for technology leadership and global geopolitics, with the US to stop China from being an advanced power in chip, silicon slice has spurred the creation of innovative computing devices such as smartphones and virtual reality glasses.
Today, chips are an essential part of modern life, even beyond the innovations of the tech industry, from military equipment and cars to kitchenware and toys.
Nationwide, more than 35 companies have committed nearly $200 billion to chip-related manufacturing projects since spring 2020, according to the Semiconductor Industry Association, a trade group. The money will be spent in 16 states, including Texas, Arizona and New York on 23 new chip factories, nine expansions and investments from companies that supply equipment and materials to the industry.
Pushing is one aspect of a industrial policy initiative of the Biden administration, which is suspending at least $76 billion in grants, tax credits and other subsidies to encourage domestic chip production. Along with providing far-reaching funding for infrastructure and clean energy, these efforts constitute the largest U.S. investment in manufacturing since World War II, when the federal government unleashed spending on new ships, pipelines and factories to produce aluminum and rubber.
Daniel Armbrust, former chief executive officer of Sematech, a now-defunct chip consortium founded in 1987 with the Department of Defense and funding from member companies, said: “I’ve never seen one like this before. such a tsunami.
President Biden has placed an important part of his economic agenda on stimulating US chip production, but his reasons go beyond economic interests. Most of the advanced chips in the world today are Made in Taiwan, an island that China claims as its territory. That has raised concerns that the semiconductor supply chain could be disrupted in the event of a conflict — and that the United States would be at a technological disadvantage.
New U.S. manufacturing efforts could correct some of these imbalances, industry executives said — but only to an extent.
New chip factories will take years to build and may not offer the industry’s most advanced manufacturing technology when they start operating. Companies can also delay or cancel projects if they don’t get enough funding from the White House. And a severe skills shortage could dampen the boom, as compound factories need more engineers than graduates from U.S. colleges and universities.
“The huge sums of U.S. chip production are not going to try,” said Chris Miller, an associate professor of international history at the Fletcher School of Law and Diplomacy at Tufts University and the author of a study. attempt or succeed in achieving the goal of self-sufficiency”. recent book on the chip industry’s battle.
White House officials have argued that investments in chip manufacturing will significantly reduce the proportion of chips that need to be purchased from abroad, improving the economic security of the United States. At the TSMC event in December, Mr. Biden also highlighted the potential impact on technology companies like Apple, which rely on TSMC to meet their chip manufacturing needs. “It could be a game changer,” he said, as many of these companies “bring more of their supply chains home.”
US companies led chip manufacturing for decades starting in the late 1950s. But the country’s share of global manufacturing capacity gradually declined to about 12% from about 37% in 1990. , as countries in Asia encourage the relocation of production to those coasts.
Today, Taiwan accounts for about 22% of total chip production and more than 90% of the most advanced chips manufactured, according to industry analysts and the Semiconductor Industry Association.
The new spending is set to improve America’s standing. A $50 billion government investment that is likely to boost corporate spending will bring the share of U.S. global manufacturing to 14% by 2030, according to a study by the Investment Corporation. Boston Consulting in 2020 commissioned by the Semiconductor Industry Association.
John Neuffer, president of the association, said: “This really puts us in the game for the first time in decades, adding that the estimate is likely to be conservative as Congress passed the bill. $76 billion in grants in a law known as the CHIPS Act.
However, this enhancement is unlikely to eliminate America’s reliance on Taiwan for the most advanced chips. Such chips are the most powerful because they pack the highest number of transistors per slice of silicon, and they are often indicative of a country’s technological progress.
Intel leads long race to shrink the number of transistors on a chip, often described in nanometers or billionths of a meter, with smaller numbers denoting the most advanced manufacturing technology. After that, TSMC has taken the lead in recent years.
But at the Phoenix site, TSMC may not import its most advanced manufacturing technology. The company initially announced that it would manufacture 5-nanometer chips at its Phoenix plant, before saying last month that it would also manufacture 4-nanometer chips there in 2024 and build a second factory, which will open. doors in 2026, for 3 nanometer chips. . It stops discussing further advances.
In contrast, TSMC’s factories in Taiwan by the end of 2022 started production of three nanometer technology. Handel Jones, executive director of International Business Strategies, said that by 2025, factories in Taiwan will likely start supplying 2-nanometer chips to Apple.
TSMC and Apple declined to comment.
Whether other chip companies will bring more advanced technology for advanced chips to their new locations remains unclear. Samsung Electronics has a plan 17 billion USD investment at a new plant in Texas, but has not disclosed production technology. Intel is making chips around 7 nanometers in size, although it says its US factories will produce 3-nanometer chips by 2024 and even higher-end products soon after.
The spending boom is also set to reduce, though not eliminate, the US’s dependence on Asia for other chips. Domestic factories produce only about 4% of the world’s memory chips — which are needed to store data in computers, smartphones and other consumer devices — and its planned investments. Micron could eventually raise that rate.
But it’s still possible that there are gaps in many of the older, simpler chips, which have been so in short supply over the past two years that American car companies must close factories and manufacture of partially finished vehicles. TSMC is a major manufacturer of some of these chips, but it is focusing new investments on more profitable advanced chip factories.
“We still have an unaffected dependency under,” said Michael Hurlston, chief executive officer of Synaptics, a Silicon Valley chip designer heavily reliant on TSMC’s former factories in Taiwan. any form.
According to the Semiconductor Industry Association, the chip manufacturing boom is expected to create job opportunities for 40,000 new positions in the factories and companies that supply them. That would add to about 277,000 US semiconductor industry employees.
But it won’t be easy to fill so many skilled positions. Chip factories often need factory machinery operator and scientists in fields such as electrical engineering and chemistry. According to recent surveys of executives, the talent shortage is one of the industry’s toughest challenges.
The CHIPS Act covers workforce development funding. The Commerce Department, which is overseeing the withdrawal of benefits from the CHIPS Act funds, has also made it clear that organizations seeking funding should put in place a plan to train and educate workers.
Intel, in response to the issue, plans to invest $100 million to advance training and research at universities, community colleges and other technical educators. Purdue University, which has built a new semiconductor lab, has set a goal of training 1,000 engineers a year and has engaged chipmaker SkyWater Technology to build a 1.8 billion manufacturing plant. dollars near the school’s Indiana campus.
However, training can only go so far, as chip companies compete with other industries in dire need of workers.
“We’re going to have to build a semiconductor economy that appeals to people when they have other options,” Mitch Daniels, Purdue’s president at the time, said at an event in September.
Since training efforts can take years to bear fruit, industry executives want to make it easier for highly educated foreign workers to get visas to work in the United States. States or stay after they get the degree. Officials in Washington know that comments encouraging more immigration could spark political fire.
But Gina Raimondosecretary of commerce, was outspoken in a November speech at the Massachusetts Institute of Technology.
Attracting the world’s best scientific minds is “an advantage America will lose,” she said. “And we’re not going to let that happen.”
