As 2022 wraps up, the impacts of the pandemic and supply chain issues are still being felt, but the outlook for the chip shortage looks better in the coming years.
According to report, the pandemic has slowed semiconductor production and contributed to the subsequent chip shortage. From consumer goods to auto-making, a lack of semiconductors has stymied production and held back innovation. However, legislative developments this year such as the 2022 CHIPS and Science Act (also known as the CHIPS Act) have begun to alleviate that shortage and pave the way for greater innovation and emerging technologies here in the U.S.
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In 1990, 80% of the world’s semiconductors were produced in the U.S. and Europe. Today, 80% are produced in Asia, where countries provide substantial incentives to domestic semiconductor industries. The CHIPS Act is one of the most significant competition and innovation policies in a generation. Investments made possible by the CHIPS Act will allow the U.S. to once again competitively pursue the production of semiconductors — decreasing our dependence on global supply chains during a time of geopolitical uncertainty.
In response to the passage of the CHIPS Act, many companies looking to receive some of the business incentives created by the law announced additional investments in American semiconductor manufacturing. For example, Intel broke ground on a plant in Ohio and further intends to provide $17.7 million for “proposals from leading institutions and collaborators in Ohio to develop semiconductor-focused education and workforce programs”. The project is expected to generate 7,000 construction jobs and 3,000 long-term positions in manufacturing and engineering. This project comes after Intel committed to expanding operations in Arizona, New Mexico, and Oregon as well.
Meanwhile, Micron announced a $40 billion investment in memory chip manufacturing. Qualcomm and GlobalFoundries announced a new partnership through 2028 that includes $4.2 billion to manufacture chips in an expansion of GlobalFoundries’ upstate New York facility.
Earlier this year, Taiwanese chipmaker Taiwan Semiconductor Manufacturing Company Limited (TSMC) began construction on a new $12 billion plant in Arizona. President Biden visited the site this week, where TSMC is aiming to produce 3-nanometer chips, its most advanced technology.
The semiconductor industry is reaching a critical turning point. The CHIPS Act is a great step forward, but if the U.S. wants to be a leader in semiconductor production, we will have to do more than just invest large sums of money in plant production.
With more companies turning towards semiconductor production here in the U.S. and abroad, there will likely be an uptick in lab-to-fab (research to the design and manufacture of semiconductor products) supply chains. There will also be support for innovation in the industry through partnerships similar to the U.S. National Science Foundation and Intel’s collaborative efforts to train and build a skilled semiconductor manufacturing workforce. To see continuing success, the U.S. semiconductor industry will need to better handle long-term investment in R&D as well as talent acquisition, training, and retention.
This landmark investment in U.S. competitiveness in the semiconductor industry has sweeping benefits not only for the semiconductor industry, but also for the tech industry at large. Semiconductor production drives competition and innovation not only around the production of more chips but the many industries that chips support. From consumer goods to automaking, a lack of semiconductors has stymied production and held back innovation. A greater emphasis on supplying our own chips will support the creation of new technologies and foster a culture of innovation here at home.
As we look ahead to 2023, we are seeing greater attention towards sustainable long-term efforts to support the semiconductor industry. Legislation such as the CHIPS Act — when paired with efforts from companies, NGOs, governmental bodies, and more — will position U.S. workers and businesses to become highly competitive in the semiconductor industry and ensure the competitive and innovative nature of U.S. tech leadership.