In September, chip giant Intel pledged to invest at least $20 billion in two new factories that will make semiconductors on land near Columbus, Ohio.
A month later, Micron Technology celebrated the opening of a new manufacturing facility near Syracuse, New York. The chip company expected him to spend $20 billion over this decade, perhaps five times as much in the end.
And in December, Taiwan Semiconductor Manufacturing Company will host a shindig in Phoenix, tripling its investment to $40 billion and building a second new fab to manufacture advanced chips.
The pledge is part of a massive increase in U.S. chip-making plans over the past 18 months, the size of which has been likened to investments in the Cold War-era space race. This boom has implications for global technological leadership and geopolitics. The US aims to prevent China from becoming a developed power in chips, slices of silicon that have driven the creation of innovative computing devices such as smartphones and virtual reality goggles.
Today, chips have transcended the creations of the technology industry and become an integral part of modern life, from military gear and cars to kitchen appliances and toys.
Since spring 2020, more than 35 companies nationwide have pledged nearly $200 billion to chip-related manufacturing projects, according to the Semiconductor Industry Association, an industry group. The funds will be used in 16 states, including Texas, Arizona and New York, for 23 new chip plants, nine plant expansions and investments from companies that supply equipment and materials to the industry.
The push is one aspect of the Biden administration’s industrial policy initiative, which dangles at least $76 billion in grants, tax credits, and other subsidies to boost domestic chip production. In addition to extensive funding for infrastructure and clean energy, this effort is the first since World War II, when the federal government unleashed spending on new ships, pipelines and factories to produce aluminum and rubber. Arguably constitutes the largest investment in US manufacturing.
“I’ve never seen a tsunami like this,” said Daniel, former chief executive of Sematech, a now-defunct chip consortium founded in 1987 funded by the Pentagon and member companies. Armbrust said.
President Biden is betting a key part of his economic agenda to stimulate US chip production, but his reasons go beyond economic interests. Made in Taiwan, which is claimed by China. That has raised concerns that a dispute could disrupt the semiconductor supply chain and put the United States at a technological disadvantage.
What is inflation? Inflation is the loss of purchasing power over time. So your dollar won’t go as well tomorrow as it did today. It is usually expressed as annual changes in the prices of commodities and services such as food, furniture, apparel, transportation and toys.
New U.S. production efforts may correct some of those imbalances, industry executives said, but only to an extent.
Building a new chip plant will take years and may not offer industry-leading manufacturing technology when it starts operating. Companies can also postpone or cancel projects if they don’t get enough subsidies from the White House. And since complex factories require far more engineers than the number of students graduating from U.S. colleges, a severe skills shortage could hold back the boom.
Associate Professor of International History at Tufts University’s Fletcher School of Law and Diplomacy and a recent book on the chip industry battle.
White House officials argue that investments in chip manufacturing will greatly reduce the proportion of chips that need to be purchased from abroad, making the United States more economically secure. At the TSMC event in December, Biden also highlighted the potential implications for tech companies like Apple that rely on TSMC for their chip manufacturing needs. He said these companies “could be a game changer” as they “bring more of their supply chains home.”
American companies have led chip production for decades, starting in the late 1950s. However, China’s share of the world’s production capacity has gradually declined from about 37% in 1990 to about 12%.
According to industry analysts and the Semiconductor Industry Association, today Taiwan accounts for approximately 22% of all chip production and more than 90% of the cutting-edge chips produced.
New spending is set to improve America’s standing. His 2020 Boston Consulting Group study, commissioned by the Semiconductor Industry Association, found that $50 billion in government investment will drive business spending, pushing the U.S. share of global production to his 14% by 2030. may reach.
“This really put us in the game for the first time in decades,” said the association’s president, John Neufer, as Congress approved $76 billion in subsidies in a bill known as the CHIPS Act. Estimates may be conservative, he added. .
Still, the buildup is unlikely to make the US less dependent on Taiwan for cutting-edge chips. Such chips are the most powerful and are often taken as a sign of the country’s technological progress, as they contain the maximum number of transistors in each slice of silicon.
Intel has long been leading the race to shrink the size of its transistors so they can fit more chips. The pace of miniaturization is usually expressed in nanometers or billionths of a meter, with smaller numbers indicating leading-edge manufacturing technology. After that, TSMC has surged in recent years.
But at the Phoenix site, TSMC may not import cutting-edge manufacturing technology. The company initially announced it would produce his 5-nanometer chips at its Phoenix factory, but last month it said it would produce 4-nanometer chips by 2024, and its 3-nanometer plant, which is set to open in 2026. announced plans to build a second plant for chips. We did not go so far as to discuss further progress.
By contrast, at the end of 2022, TSMC’s factories in Taiwan will start producing 3-nanometer technology. Handel Jones, chief executive of International Business Strategies, says it’s likely that by 2025, Taiwanese factories will start supplying his Apple with his 2-nanometer chips.
Understanding Inflation and How It Affects You
TSMC and Apple declined to comment.
It’s unclear if other chip companies will bring more advanced technology from their cutting-edge chips to the new site. Samsung Electronics plans to invest $17 billion in a new plant in Texas, but has not disclosed production technology. Intel makes 7-nanometer chips, but the company’s U.S. factory says it will produce 3-nanometer chips by 2024, with more advanced products soon after. ing.
The spending boom will also reduce, if not eliminate, America’s reliance on Asia for other types of chips. Only about 4% of the world’s memory chips are produced in domestic factories, which are needed to store data in computers, smartphones and other consumer devices.
But U.S. automakers have been forced to close factories and produce partially-finished cars, a comprehensive package of older, simpler chips that have been so in short supply over the past two years. TSMC is a major producer of some of these chips, but it’s focusing new investments in more profitable factories for advanced chips.
said Michael Hurlston, chief executive of Synaptics, a Silicon Valley chip design company that relies heavily on TSMC’s old fab in Taiwan.
According to the Semiconductor Industry Association, the chip-manufacturing boom is expected to create jackpot jobs, creating 40,000 new roles in the factories and companies that supply chips. This brings the US semiconductor industry to approximately 277,000 employees.
But filling so many skilled positions is not easy. Chip factories typically require technicians to operate the factory machinery and scientists from disciplines such as electrical and chemical engineering. Talent shortages are one of the industry’s toughest challenges, according to a recent executive survey.
The CHIPS Act includes funds for workforce development. The Department of Commerce, which oversees the disbursement of grants from CHIPS Act funds, also clarified that organizations wishing to obtain funding should develop plans for the training and education of their workers.
In response to this problem, Intel plans to invest $100 million to facilitate 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 graduating 1,000 engineers each year and has lured chipmaker Skywater his technology to Indiana, where he plans to invest $1.8 billion in manufacturing near his campus. built a factory.
But chip companies compete with other industries that are in dire need of workers, so training may only go so far.
“We have to build a semiconductor economy that attracts people who have a lot of other options,” Mitch Daniels, who was then president of Purdue University, said at an event in September.
Because training efforts can take years to bear fruit, industry executives are urging highly educated foreign workers to obtain visas to work in the United States or stay after completing a degree. Washington officials recognize that comments encouraging more immigration can spark political fire.
But Commerce Secretary Gina Raimond was outspoken in a speech she gave at the Massachusetts Institute of Technology in November.
Attracting the world’s best scientists is “an advantage America loses,” she said. “And we won’t let that happen.”