Semiconductors are a ubiquitous component, found in everything from smartphones to cars and kitchen appliances. A surge in consumer demand, paired with compromised capacity, has led to shortages for a wide variety of products that require semiconductors to work. But a newly passed bill by legislators in Washington may be the shot in the arm manufacturers need to ramp up production.
On the South Lawn of the White House, President Joe Biden signed the CHIPS and Science Act into law. The $280 billion piece of legislation is rife with earmarks designed to address several issues impacting the supply chain, with nearly $53 billion of the total going toward semiconductor development.
During the ceremony, Biden said the CHIPS and Science Act will have historic consequences for the United States.
“The future of the chip industry is going to be made in America,” Biden said, as reported by Supply Chain Dive.
While the United States does produce semiconductors, countries like China, Taiwan and several others in East Asia are the world’s leaders. Others include Singapore, South Korea, Thailand and the Philippines.
Both lawmakers and semiconductor manufacturers believe this bill will help to even the playing field so businesses don’t have to be as dependent on those other nations.
“Today marks a giant leap forward for American innovation and competitiveness and the launching point for re-asserting U.S. leadership in semiconductors,” said Semiconductor Industry Association CEO John Neuffer in a prepared statement. “By enacting the CHIPS Act, President Biden and leaders in Congress have fortified domestic semiconductor manufacturing, design and research, thereby strengthening America’s economy, national security and supply chains for decades to come.”
Private companies also investing billions
It isn’t just the federal government that is increasing its investment with an eye toward enhancing capacity. Computer memory and data storage company Micron plans to spend $40 billion on memory chip manufacturing. If all goes according to plan, the investment will increase the U.S.’ market share of global memory chip production to 10% within the next 10 years, according to a fact sheet from the White House. Currently, the U.S. accounts for roughly 2%.
Additionally, GlobalFoundries and Qualcomm — two other leading microchip processing firms — are coming together to forge a new partnership. Among other things, the alliance will include a $4.2 billion expansion to one of GlobalFoundries’ manufacturing plants in New York.
“America invented the semiconductor … and this law brings it back home,” said Biden during the Aug. 9 ceremony outside the White House, as quoted by Supply Chain Dive. “It’s in our economic interest and it’s in our national security interest to do so.”
Much of the world’s semiconductors come from Asia, but the United States used to be a global leader. Indeed, the U.S. represented 37% of modern semiconductor manufacturing back in 1990, according to the Semiconductor Industry Association. That share has since slipped to 12%. The SIA attributes this dip to a combination of factors, including offshoring of jobs and foreign governments offering various incentives to chipmakers encouraging them to increase development. The SIA also noted Washington has neglected investing in semiconductor capacity to the same degree as in the past. The bill designed to address this imbalance includes over $79 billion in government spending over the next 10 years.