Referring to semiconductor production is to mention Asia with two representatives TSMC (Taiwan) and Samsung (Korea). Together, these two companies control more than 70% of the semiconductor manufacturing market.
The US, the once leader, completely lags behind its rivals after transforming its business model. The US has ceded most of the manufacturing work to Asian contractors, a fact that reveals great concerns as China emerges as a geopolitical rival on par with the US and the semiconductor crisis has not yet resolved. conclude. Deloitte’s research shows that the chip shortage persists through 2022, which could cost the US $500 billion.
The US is the birthplace of the world chip industry thanks to pioneers like Intel. In 1990, nearly 40% of semiconductors were manufactured in the United States. Today, 80% of this activity takes place in Asia, 12% in the US, half coming from Intel. China’s influence over chip-producing countries in Asia could give the US an edge in the global technology race. Worse, Congress fears the Pentagon and US defense contractors could lose easy access to the chips needed for advanced weapons systems.
That is why the US Congress is trying to pass a bill to allocate money to enable domestic semiconductor production. The Senate Committee on Commerce, Science, and Transportation held a hearing on the topic in which it questioned the CEOs of two chipmakers, Intel’s Pat Gelsinger and Micron’s Sanjay Mehrotra.
The factories disappeared
Centralized chip factories in Asia are not an overnight problem. In the 1990s, many companies both designed and manufactured chips. However, manufacturing is an expensive, arduous process that requires large infrastructure. So they started to outsource outsourcing companies. Experts also say it makes sense to manufacture semiconductors in the same location as other parts of the supply chain. Meanwhile, Asian countries began to heavily subsidize chip design and manufacturing.
Currently, according to TrendForce data, TSMC holds 56% of the global foundry market, while Samsung holds 18%. More importantly, they almost “include” the high-end chips needed for new technologies like artificial intelligence (AI).
Reducing dependence on Asia
The US government started moving to reduce dependence on Asian semiconductors from January 2021 when Congress passed CHIPS, a regulation to support semiconductor manufacturing under the National Defense Authorization Act of 2021 (NDAA). CHIPS authorizes a series of programs to promote domestic chip production but does not actually fund it.
The same summer, the US Senate passed the US Competition and Innovation Act (USICA) among other regulations, officially allocating $52 billion for semiconductor research, design, and manufacturing provisions. in CHIPS. In February 2022, the House of Representatives approved a similar bill called COMPETES, which also aims to allocate $52 billion for CHIPS programs. USICA and COMPETES must be compared, unified for approval by the two houses and then submitted to the US President.
Congress is also debating the FABS amendment, establishing a semiconductor investment tax credit.
US President Joe Biden signaled his intention to sign the chip bill during an event on January 21 in New Albany, Ohio, where Intel kicked off a new $20 billion chip factory. The company will build two more $20 billion plants in Chandler, Arizona.
“This is our industry”
According to CEO Gelsinger, his company is doing its part, followed by someone else’s. Although he knew that the investments would affect his profits and financial balance, he still decided to do it. However, that is not enough to revive America’s technological leadership.
Mr. Gelsinger asserted, even if the National Assembly does not approve the financial support packages, Intel’s plan to build a new factory will still proceed. “We would go smaller and slower if we weren’t funded and vice versa“.
He emphasized that Intel is one of the few remaining US technology companies with a history of focusing on investing in the US and Europe. It is important for the US to maintain some control over the semiconductor industry, which produces chips for use in every industry of the digital future.
“This industry was born in America. This is our industry“.
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