skip to Main Content
As US Moves To Regain Microchip Leadership, Some Say It Never Left

As US moves to regain microchip leadership, some say it never left

As US moves to regain microchip leadership, some say it never left

GlobalFoundaries Over the past two years, microchip shortages highlighted America’s reliance on foreign suppliers, and spurred passage of the CHIPS Act , which earmarks tens of billions of dollars as incentives for chipmakers to build new fabrication plants in the US. But remaking well-established manufacturing supply chains — notably in Asia — is a Herculean task, and “companies are loathe to do it,” according to Yossi Sheffi, an MIT professor of engineering and director of the school’s center for transportation and logistics. Sheffi believes the US won’t likely reduce its dependence on other countries for chip manufacturing — particularly China and Taiwan. “The [CHIPS Act’s] objectives are laudable, but from a supply chain perspective, the chances of it persuading companies to move their manufacturing operations back home are very low,” he said. [ Keep up on the latest thought leadership, insights, how-to, and analysis on IT through Computerworld’s newsletters . ] For one, semiconductor makers have big investments in offshore locations, and reshoring their manufacturing to the US could take decades, said Sheffi, author of the new book The Magic Conveyor Belt: Supply Chains, A.I., and the Future of Work . In addition, moving production to the US could also shift the risk of disruptions. “Shifting everything to the US will increase some risks, as all the eggs will be in a single basket,” he said. “It will lower the risks of dependency on other countries, especially hostile ones. Thus, a combination of reshoring and friends-shoring may be best.” The US, where semiconductors were invented, produced 37% of the world’s supply of chips as recently as the 1990s. Only about 12% of all computer chips are produced domestically now. In 2021, the decline in domestic chip production was exposed by a worldwide supply chain crisis that led to calls for reshoring manufacturing to the US. With the US government spurring them on, the likes of Intel , Samsung , Micron and TSMC unveiled plans for a number of new US plants. (Qualcomm, in partnership with GlobalFoundries, also said it would invest $4.2 billion to double chip production in its Malta, NY facility.) [ REGISTER NOW for May 11, in-person event, FutureIT Washington, D.C.: Building the Digital Business with Cloud, AI and Security ] Intel’s Ocotillo campus covers approximately 700 acres in Chandler, AZ. In 2021, the company broke ground on two new manufacturing facilities on the campus — Fab 52 and Fab 62. Last August, President Joseph R. Biden Jr. signed into law the CHIPS and Science Act ; it provides the US Department of Commerce with $52.7 billion for a suite of programs to “revitalize” the US position in semiconductor research, development, and manufacturing. The first round of incentives totaling $39 billion became available in February. Essentially, the CHIPS Act is an attempt to increase the percentage of microprocessors produced in the US by closing the cost differential with countries such as Taiwan, South Korea, and China. Thoe nation’s governments are already subsidizing semiconductor manufacturers. The five major semiconductor producing nations — China, South Korea, Japan, Taiwan, and the US— are all also top consumers of the technology. (China mainly manufactures mature chip technology, not the most advanced microprocessors.) Microchips are found in everything from industrial equipment and data centers to cars, smartphones, and gaming systems. Over the next decade, the biggest industries for semiconductor revenue will be servers, datacenters and data storage. They’re followed by smartphones industrial electronics, the automotive industry, and personal computing. “The most challenging factor is the need to move the entire supply chain, not just the final manufacturing stages, but [also] sources of raw material, expert suppliers, leading equipment makers, etc.,” Sheffi said. “The manufacturing of any product, at scale and at competitive quality and prices, requires entire ecosystems, or clusters, of multiple companies and it is a long-term Herculean effort to move everything.” Another hurdle: skilled labor shortages Other challenges include the significant upfront costs of building new facilities and creating domestic supply chains to compete with offshore facilities. Additionally, there is a global shortage of skilled labor to run the fabs, including in the US. One way of addressing that skills shortage would be to revamp immigration laws to make it easier for skilled labor from other nations to work in the US, according to Sheffi. “In-house solutions have not worked well in the US, in part, because of companies’ reluctance to invest significantly in a mobile workforce,” he said. One important provision in the CHIPS Act that is promising is […]

Click here to view original web page at As US moves to regain microchip leadership, some say it never left

Daisie Hobson

Daisie Hobson is a Director at the Reshoring Institute and an engineer with many years of experience in manufacturing and project management.

Leave a Reply

Back To Top