Pouring a lot of money into advanced semiconductor chips: America is afraid if something happens to China

The US poured money into the chip industry

In September 2022, on land near Columbus, Ohio, chip giant Intel pledged to invest at least $20 billion to build two new semiconductor factories.

A month later, Micron Technology chose a new manufacturing site near Syracuse, NY and expected to spend $20 billion by the end of the decade, but the final investment was probably five times that.

These commitments are part of a US plan to dramatically ramp up chip production over the past 18 months, on a scale comparable to Cold War investments in the space race.

This investment will affect global technology leadership and geopolitics as the US wants to prevent China from becoming an advanced power in chip manufacturing.

Today, chips, the backbone of the technology era, are an essential part of modern life, even beyond the creations of the tech industry, from military equipment to automobiles to kitchen appliances. and toys.

According to the American Semiconductor Industry Association, more than 35 companies across the United States have committed a total of nearly $200 billion to chip-related manufacturing projects since spring 2020.

This money will be invested across 16 states, including Texas, Arizona and New York, to build 23 new chip factories, expand 9 existing factories and invest in equipment supply companies. and materials in the industry.

The investments are part of an industrial policy promoted by the administration of President Joe Biden. This policy will provide at least $76 billion to encourage domestic chip production.

” I’ve never seen such a large investment, ” said Daniel Armbrust, former CEO of Sematech, a now-defunct chip group founded in 1987.

President Biden has placed an important part of his economic agenda on stimulating US chip production, but his reasons for doing so go beyond economic interests.

Many advanced chips in the world are now manufactured in Taiwan, China. That raised concerns that, in the event of a conflict, the semiconductor supply chain could be disrupted and the US would be at a technological disadvantage.

This effort can correct some imbalances in the supply chain, but only to a certain extent, the US chip industry senior leadership team said.

New chip factories will take years to build and may not offer the industry’s most advanced manufacturing technology when they first start operating.

Companies can also delay or cancel projects if they don’t get enough funding from the White House.

A severe shortage of such skills could cut investment because complex manufacturing processes require far more engineers than graduates from American colleges and universities.

Chris Miller, Associate Professor of International History at the Fletcher School of Law and Diplomacy at Tufts University and author of a book on chip competition says:

” Investing large amounts of money in chip manufacturing technology is not because the US wants to realize the goal of self-sufficiency .”

White House officials said that investing in chip production would significantly reduce the percentage of chips that had to be purchased from abroad, thereby improving the economic security of the United States.

At TSMC’s event in December, President Biden also highlighted the potential impact of those investments on tech companies like Apple, which rely on TSMC for chip needs.

For decades beginning in the late 1950s, American companies led the way in chip production.

But the share of global chip production by US companies has gradually declined from about 37% in 1990 to about 12% today, as Asian countries offer incentives for chip production.

Today, Taiwan produces about 22% of total global chip production, of which advanced chips account for more than 90%.

New investments will improve America’s position. A $50 billion investment could spur companies to spend more to increase the share of global U.S. chip production to 14% by 2030, according to a 2020 Boston Consulting Group study.

” This is really the first time we’re in the game in decades ,” said John Neuffer, CEO of the American Semiconductor Industry Association.

He also said the 14% estimate might be conservative because Congress approved a $76 billion grant under the Science and Chips Act.

Difficult to eliminate dependence on Taiwanese chips

However, increased investment is unlikely to eliminate America’s reliance on the most advanced chips made in Taiwan.

Intel has long been a leader in the race to shrink transistors, allowing as many transistors to be inserted into a chip.

Shrinkage rates are usually described in nanometers or billionths of a meter, the smaller the number the more advanced the manufacturing technique.

In recent years, TSMC has taken the lead in recent years.

But TSMC’s Phoenix plant may not have the most advanced manufacturing technology available.

TSMC initially announced that it would produce 5-nanometer chips at its Phoenix plant, then last December it said it would produce 4-nanometer chips by 2024 and build a second factory to to start producing 3-nanometer technology chips in 2026.

In contrast, TSMC’s factory in Taiwan has started producing 3-nanometer technology chips by the end of 2022.

Handel Jones, CEO of International Business Strategies, said the factory in Taiwan could start supplying 2-nanometer technology chips to Apple by 2025.

TSMC and Apple declined to comment on the matter.

It is unclear if other chipmakers will bring more advanced technology to their new facilities.

Samsung Electronics plans to invest $17 billion in a new factory in Texas, but hasn’t disclosed the manufacturing technology yet.

Intel is making chips with 7-nanometer technology, although Intel says its plants in the US will start producing 3-nanometer technology chips in 2024, even upgrading to more advanced products soon after. .

The investment boom will likely reduce, but not eliminate, America’s dependence on Asia for other chips.

US domestic factories produce only about 4% of global production of memory chips, which are needed to store data in computers, smartphones and other consumer devices.

But chips with older, simpler technology are still likely to be in short supply.

Over the past two years, these chips have been in such severe shortages that American automakers have had to close factories to produce semi-finished products.

Although TSMC is the main manufacturer of some of these chips, it is focusing its new investment on making advanced chips that are more profitable.

Michael Hurlston, CEO of Synaptics, a Silicon Valley chip designer that relies heavily on TSMC’s factories in Taiwan, said:

” We still have a dependency, and the new investment doesn’t change that dependency .”

According to the American Semiconductor Industry Association, the chip manufacturing investment boom is expected to create 40,000 new jobs in the US. That would add about 277,000 jobs in the US semiconductor industry.

But it won’t be easy to fill so many skilled positions.

Chip factories often require technicians to operate factory machinery, as do scientists in fields such as electrical and chemical engineering.

The talent shortage is one of the industry’s toughest challenges.

Intel plans to invest $100 million to promote training and research at universities, community colleges and other technical training institutions.

Purdue University, which has built a new semiconductor lab that aims to train 1,000 engineers a year, has attracted chipmaker SkyWater Technology to build a $1.8 billion manufacturing plant. near campus.

However, human resource training is not the answer when chip companies compete with other industries that are in dire need of workers.

” We’re going to have to build a semiconductor economy that appeals to a lot of people when they have so many other options,” said Mitch Daniels, a former Purdue dean at an event last September.

Because training can take years to produce results, semiconductor executives want the US government to make it easier for highly educated foreign workers to apply for work visas in the US. America or stay in the US after graduation.

Commerce Secretary Gina Raimondo also said: ” Attracting the world’s best tech talent is an advantage that America could lose. We’re not going to let that happen .”

According to The New York Times