Tech

How a chip shortage could help high-tech manufacturing in the US


The manufacturers didn’t make it through worldwide semiconductor shortage. Game consoles like PlayStation 5 still scarce, car manufacturers are delivering vehicles with missing featuresand Apple may end production 10 million less iPhones in 2021. However, for some companies, supply chain woes There may be an unexpected price increase.

Production stagnation abroad and unrelenting demand for consumer electronics have been a headwind for some chipmakers in the United States. Even little-known American manufacturers for second-hand or second-hand equipment have seen a spike in sales of their second-hand chips or microcontrollers. These parts are made inexpensively but a key component for many devices, and as supply chain troubles affected larger companies focusing on more advanced technologies, demand for basic chips has increased. Concurring with customers, the companies that make these microcontrollers are currently spending heavily to increase their overall production capacity.

An Arizona-based semiconductor supplier, Microchip Technology, is investing in expensive new equipment and hiring more employees because its profits tripled last quarter, according to the New York Times. GlobalFoundries, a chip maker based in Malta, New York, announced in July that it will build another chip factory nearby in an attempt to double its production capacity. And just last month, a North Carolina manufacturer announced its axis of rotation to the semiconductor and changed its name from Cree to Wolfspeed. The company is also in the process of building a new manufacturing facility in upstate New York. GM has register as a strategic customer, another clear sign that the chip supply crisis is benefiting some US sellers and opening doors to new customers.

Taken together, these developments point to a trend that industry leaders hope will become a renaissance for the US chip industry. Last May, Texas Instruments began construction on a $3.1 billion chip factory close to its headquarters in Dallas and can finalize plans for other premises Early. Last March, Intel announced that they will spend more $20 billion to build two new chip factories factories in Arizona, and the company says they can create more than 3,000 jobs. The world’s largest chipmaker, Taiwan-based TSMC, has begun building on a factory worth 12 billion dollars in Arizona. Now, local economic leaders are attracting other companies also working with TSMC to start operations there.

John Neuffer, CEO of the Semiconductor Industry Association, told Recode: “We just want to make sure that a lot of the manufacturing facilities that are being built in the future will be built here. “It’s about making sure that, going forward, we have a better balanced supply chain.”

The US government wants to capitalize on this momentum. President Joe Biden is eager to strengthen the resilience of the country’s chip supply, which government officials believe is vital to national security. At the same time, politicians on both sides of the aisle are eager to boost high-tech manufacturing in the US, which has declined over the past few decades after many companies chose to build new factories abroad.

Whether a new wave of chip production can help the US expand its role as a global high-tech manufacturing hub remains unclear. Despite the administration of the Biden administration try To solve the chip shortage, chip manufacturers in the US and abroad have motioned that, without direct financial incentives, they will send their new production elsewhere in the future. Even Idaho-based Micron Technology, the last major semiconductor manufacturer for computer memory remaining in the US, said that the future of domestic production hinge on financial incentives. The company plans to spend more than $150 billion on chip research and development over the next decade, but has made it clear that it will build new factories abroad if it does not receive proper support from the US government.

These companies want Congress to approve a $52 billion grant to boost domestic chip manufacturing incentives and help companies buy more production equipment. These subsidies could be crucial to preventing the US share of global chip manufacturing from falling further. Currently, only 12% of the world’s chip production is in the US, a sharp drop compared to 37 percent share Chip manufacturing took place in the US in 1990. While Republican and Democratic leaders have said they look forward to supporting high-tech manufacturing, chip industry leaders say the government has yet to offers the same financial incentives as other countries, including China and Japan, are also ramping up their chip production.

Time is of the essence. Right now, companies are racing to build facilities around the world to make chips for future technologies, including 5G devices and electric vehicles. Once these multi-billion dollar facilities start production, they are incapable of taking over and moving.

This story was first published in the Recode newsletter. Sign up here so you don’t miss the next one!



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