The US is spending billions to boost chip production. Will it be enough? | So Good News

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The U.S. government is pulling out all the stops to boost domestic semiconductor production, and is flexing billions of dollars in all the policy muscle available to keep it one step ahead of Asia’s competition.

When the epidemic occurs in 2020, Companies are using smartphones, computers, Initial orders for these small building blocks needed for cars and many other products have been reduced. After that, As people start working from home, so does demand for information and communications technology, and the chips that power them. There was a chip shortage and automated factories were forced to stop production because they couldn’t get the chips. This has contributed to skyrocketing new and used vehicle prices, and Americans are suffering from the main driver of painful inflation.

In a statement earlier this year, Commerce Secretary Gina Raimondo called the semiconductor shortage a “national security” issue because it highlights the dependence of U.S. manufacturing on imports of semiconductors from abroad. The chips serve critical military applications and are essential for cybersecurity tools.

The Biden administration and lawmakers marched in response, passing the CHIPS and Science Act into law in August. The legislation includes $52 billion to boost semiconductor manufacturing in the United States. Of this, $39 billion is for manufacturing incentives; $13.2 billion for research and development and workforce training, and $500 million for international information and communication technology security and semiconductor supply chain activities.

Against that backdrop, several prominent companies have announced their presence. Investments in US manufacturing. Industry powerhouse Taiwan Semiconductor Manufacturing Company (TSMC) has agreed to build a semiconductor manufacturing plant in Arizona worth at least $12 billion. Production is expected to begin in 2024. At the beginning of the year, Intel said it planned to build a $20. Groundbreaking for a new multi-billion semiconductor plant and chip factory in Ohio was just last month. This month, Micron has said it will invest up to $100 billion over the next two decades to build a giant semiconductor plant in upstate New York.

There was a flurry of tweets from President Joe Biden earlier this month. Promised.“The U.S. Will Lead the Way in Microchip Manufacturing.”

But America has a lot to do. US-based fabs, or chip manufacturing plants, currently account for only 12% of the world’s advanced semiconductor production capacity, according to data from the Semiconductor Industry Association trade group. 75% of the world’s advanced chip manufacturing is now concentrated in East Asia, much of it in geopolitically sensitive Taiwan. Even with these renewed efforts, The United States does not currently have the same talent and supply chain pipeline to support a strong domestic industry in some Asian markets.

To complicate matters, It comes at a questionable time as concerns over global chip supply shortages have eased amid a surge in public and private investment. Pandemic-related supply chain disruptions are slowing somewhat, and a worsening economic outlook is hampering demand.

In an earnings call last week, TSMC CEO CC Wei warned that by 2023, “the semiconductor industry is likely to decline.” TSMC is also not immune,” Wei added, but “is expected to be more resilient than the overall semiconductor industry. ”

Now ramping up semiconductor production in the United States could lead to oversupply and oversupply. As demand declines, it’s not immediately clear whether government subsidies will be enough to overcome other hurdles the country faces in developing a competitive semiconductor manufacturing hub.

To understand America’s latest efforts; It is important to be clear where the country stands not only in the chip industry as a whole but also in relation to specific and valuable pockets.

“The US is unlikely to increase its share of global production as it brings more capacity online. TSMC Intel and others are announcing fabs elsewhere and building them more rapidly,” said Scott Kennedy, senior adviser at the Center for Strategic and International Studies.

“But I don’t think it’s a real big problem,” he added. He noted that measuring production based on pure output bumps is a more realistic and meaningful measure of manufacturing low-end chips and chips that combine cutting-edge chips with advanced chips. “The U.S. needs to expand chip production for specific types of chips directly related to U.S. national security,” he said.

The Biden administration last Friday imposed new export restrictions designed to limit China’s access to advanced semiconductors, targeting the production of advanced weapons systems.

Although only about 10% to 14% of the chips were sold. [globally] It comes from American manufacturing plants,” said the Columbia Business School professor. Dan Wang America has other advantages. “In terms of design expertise, a lot of it is still located in the US.”

Still, the downsides are real. “As far as the semiconductor manufacturing sector is concerned, the foundation factories. “The US has not been a major player for many years,” Wang said. As before, Manufacturing moved to Asia in the 1980s and 90s, Wang said. “A big reason for this is that it’s cheaper to manufacture integrated circuits and chips on a very large scale in those parts of the world because of lower labor costs,” Wang said. TSMC’s founder Morris Chang said it costs 50% more to make chips in the US than in Taiwan.

Now, having facilities to manufacture or scale up chips, simply put, is a huge advantage for Asia. “We may see the United States throwing a lot of money at companies to set up factories in the U.S.,” Wang said. Not only to respond to requests and become more self-reliant, but also because “you need to do these things at speed to even be in the race.”

Building new chip fabs manually is a costly and time-consuming endeavor. According to Gartner analyst Bob Johnson, “a modern screen is something like a half million square feet,” and requires “very clean rooms with enormous air handling capabilities.” He added that such large structures require “very strong foundations”. As he puts it, “It’s destructible, so there can’t be any vibrations in the glass. production process.”

In addition, an ultra-violet machine needed to map out the circuit of chips costs about $150 million, and Reuters reports that “a state-of-the-art chip factory needs 9-18 of these machines.”

In addition, Manufacturing semiconductors requires many specialized inputs, including refined chemicals such as fluorinated polyimide. and etching gas, chip etching machine and more. Taiwan and Japan In places like Fukuoka, suppliers of these products have developed supply chains located near semiconductor factories. There are also one or two companies that produce critical inputs and have long been reliable suppliers to companies in Asia. Plans are underway to build large-scale chip manufacturing plants in places like Arizona and Ohio.

We also need a workforce that is willing to do the job.

The United States is experiencing a shortage of both new graduates and experienced workers with the technical and engineering knowledge needed to manufacture semiconductor devices. According to Kennedy, most people with the right experience prefer to work in advanced industries.

“If we were to point our fingers today and hold ten new wedges with world-leading chips, we wouldn’t have enough staff to staff them,” Kennedy said. “It’s not capital, but the biggest obstacle to expanding America’s powerful capabilities.”

Intel has tried to recruit engineers to establish a close relationship with Arizona State University, but it is uncertain whether it and the companies building fabs in America will be able to hire enough trained engineers and technicians. Otherwise, billions of dollars in electrode production from the private and public sector will not be enough to recover.