This is largely driven by the landmark CHIPS Act.
The big picture: With the US locked in a trade war with China, the focus is now more than ever on local chip manufacturing. It is no surprise that the country is not resting on its laurels and has invested unprecedented amounts this year in projects to advance its position.
According to a recent tweet by Martin Chorzempa, a senior fellow at the Peterson Institute, the US government’s investment in building electronics manufacturing in 2024 alone will exceed total spending from 1996 to 2020 (a 24-year period).
Chips Act attracts crazy investments. The US is now ready to invest more in the construction of the electronics industry this year alone, as it did for TOTAL from 1996 until the adoption of the chip law in 2020 (the financing was not yet secured at that time, but the investment has started) pic. twitter.com/rfBg4XKybp
— Martin Chorzempa 马永� »ï¿½ (@ChorzempaMartin) May 31, 2024
That increase can be largely attributed to the Biden administration’s ambitious CHIPS and Science Act, a $280 billion spending package signed into law in 2022. The law aimed to revitalize the US semiconductor industry, which had almost no fingerprints.
Major players such as Intel, Micron, GlobalFoundries, Polar Semiconductor, TSMC, Samsung, BAE Systems and Microchip Technology were direct beneficiaries of the law. Intel received the largest direct investment, a staggering $8.5 billion, followed by TSMC with $6.6 billion and Samsung with $6.4 billion.
All these efforts seem to be paying off, at least according to a study by the Semiconductor Industry Association (SIA). The association predicts that the United States will produce about 28% of all advanced logic chips (made using processes newer than 10 nanometers) by 2032.
These investments come at an opportune time. Thanks to increased demand for chips driven by the emergence of generative AI models that require powerful chips, local manufacturing has become more crucial than ever. In February, the Biden administration also announced funding for research into substrate packaging technologies aimed at advancing semiconductor development.
However, these efforts have not been without challenges, primarily due to inadequate regulation. Major factory construction projects across the country are facing significant delays, with Samsung, TSMC and Intel lagging behind by a year or more.
TSMC’s $40 billion project in Arizona, for example, was pushed back to 2025 due to a lack of local expertise, with the second plant now scheduled to operate between 2027 and 2028.
A particularly significant obstacle is the lack of qualified labor to staff these newly built factories. A Commerce Department official highlighted the urgent need to revitalize skills and talent in semiconductor manufacturing, especially given the significant reduction in the industrial presence in the United States over the past 35 years.
