Wed. Jul 17th, 2024

The US wants to make 20% of the world’s cutting-edge semiconductors by 2030.

By nr39r Mar2,2024

Under its “Chips for America” initiative, the US government aims to increase domestic manufacturing of high-tech chips to 20% of worldwide output by 2030. It is believed that this target is within reach thanks to the massive investment campaigns of TSMC, Samsung, Intel, and Micron Technology.

What kind of progress has the US made in its “Chips for America” initiative toward its goal of bringing a significant amount of advanced semiconductor production back to the US? This is something that Gina Raimondo, the US Secretary of Commerce and the person responsible for implementing this strategy, is certain of. During her lecture at the Center for Strategic and International Studies (CSIS) in Washington, US on February 26, she commented. “We believe that our investment will put our country on track to produce approximately 20% of the world’s advanced logic integrated circuits by the end of the decade,” according to her. I don’t understand what this means. Why? Because right now we’re practically at zero.

Logic integrated circuits are very complex, but what does the minister mean by that? His explanation was vague. Does the fact that these items are made using 3-nanometer technology mean that they are exclusive to the two businesses that started the semiconductor industry—TSMC in Taiwan and Samsung in South Korea—? Alternatively, those made with technology smaller than seven nanometers? Right from the bat, what is the current location of the USA?

“It depends on what we mean by cutting-edge chips,” says Dan Hutcheson, an analyst at TechInsights, a market research group serving the semiconductor industry in the United States. “The answer is dependent on what we mean by cutting-edge chips.” On a scale from one nanoscale to the next, the United States is home to slightly more than 5% of the world’s most advanced technology. Regardless, it rises to around 10% across the board for the seven-, five, and three-nanometer technologies. The majority of the output about this area comes from Taiwan, with the rest coming from South Korea.

In light of the dramatic increase in demand for semiconductors globally, the US has taken the bold step of reestablishing its chip manufacturing industry. The Department of Commerce launched the CHIPS for America program in February of this year, reflecting the same idealistic spirit that was common throughout the space race. A major roadblock is the absence of domestic chip manufacturing, even though American companies are leading the way in AI development. The US plans to manufacture 20% of the world’s most advanced chips by 2030 and eliminate this deficit by strategic investments in R&D, talent development, and production.

Gina Raimondo, the United States Secretary of Commerce, has remained optimistic about the program’s ability to transform American industry. To fortify its supply chains and reduce reliance on foreign geopolitical rivals, the US plans to invest in state-of-the-art logic chip fabrication and onshore memory manufacture. In a speech given at the Center for Strategic and International Studies (CSIS) on February 26, 2024, Secretary of Commerce Gina Raimondo announced that thanks to investments in the production of cutting-edge logic chips, the US will be able to produce about 20% of the world’s supply by the end of the decade.

Why is there a manufacturing gap between China and the US?

Several factors contributed to the significant gap in chip manufacturing in the US. Several semiconductor businesses have reduced their manufacturing costs by outsourcing to other countries. This has reduced the capacity of local chip manufacturers, which is the first step. Second, construction of state-of-the-art fabrication facilities became more complicated and expensive as semiconductor technology advanced, which deterred investment in new fabs.

Concurrently, the level of competition was raised as global competitors like China, South Korea, and Taiwan expanded their chip industries at a rapid pace. When compared to other nations, the US government no longer provides substantial support to its semiconductor companies. Building and running semiconductor fabs in the US is already a challenging and costly ordeal due to regulatory hurdles, such as environmental standards.

Outsourcing, technology challenges, global competition, regulatory issues, government backing, and lack of support are among the reasons the US lags behind other countries in chip manufacturing. Consequently, the US does not produce any of the world’s most cutting-edge semiconductors.

U.S. officials came to terms with their decision after the rest of the world woke up one morning in dire need of state-of-the-art processors to power the technology that would spark a new industrial revolution.

We should give more priority to future-proof projects.

Raimondo announced during her speech that the US will prioritize projects that will be operational by the end of this decade. To clarify things, she pointed out, “I want to be clear: there are many worthy proposals that we’ve received with plans to come online after 2030, and we’re saying no, for now, to those projects because we want to maximize our impact in this decade.”

America will prioritize “excellent projects that could come online this year” over continuing to incentivize projects with a ten- or twelve-year timeline for completion. Additionally, she brought up the goal from last year: by the time the US pulls the plug on the CHIPS program, there should be two brand new massive hubs of state-of-the-art logic fabrication facilities, where thousands of people will be employed.

According to her, “It gives me great pleasure to inform you today that we anticipate surpassing that target.” So far, three semiconductor companies have received financial aid from the Department of Commerce in compliance with the CHIPS Act. A major grant of US$1.5 billion went to GlobalFoundries, Microchip Technology, BAE Systems, and Microchip Technology. More money is likely to go to Samsung Electronics and Taiwan Semiconductor Manufacturing Co. as they get ready to build new plants in the US.

Raimondo further highlighted her country’s commitment to maintaining the production of legacy chips, which are copies of older chips called mature-node chips. You are all aware that autos, medical devices, defense systems, and critical infrastructure rely on mature node chips from the present generation, and we are not ignoring their importance.

By nr39r

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