Paul van Gerven
17 April

If all the announced investments pan out, the US would raise its global semiconductor manufacturing share to 20 percent.

The world’s leading-edge semiconductor manufacturers are sinking well over 200 billion dollars into production expansions in the US. The US government is chipping in too, providing 21.5 billion dollars in grants and 16 billion dollars in loans along with tax breaks on capital expenditure. In total, the US Chips and Science Act earmarks almost 53 billion dollars in stimuli to the semicon industry. This covers most of the supply chain, but the bulk ends up in the hands of leading-edge chipmakers.

The share of US semiconductor manufacturing capacity has eroded from 37 percent in 1990 to about 12 percent today, according to the Semiconductor Industry Association (SIA). The US government has set no official target, but now that Intel, Samsung and TSMC (see inset) have unveiled their plans, Washington says it’s “on track to produce roughly 20 percent of the world’s leading-edge chips by 2030.”

US manufacturing investment
The Big Three’s investments in US facilities top 200 billion dollars. Source: company reports

Incidentally, the US numbers demonstrate that the European Union will fall well short of its target of raising its market share from less than 10 to 20 percent. So far, the manufacturing expansions announced by Intel, STMicroelectronics/Globalfoundries, Infineon and TSMC (plus partners) total about 60 billion dollars.

Challenges still await the US, though. Experts wonder whether the labor market can keep up with the rapid reshoring of manufacturing operations. A study by Oxford Economics projects the semicon industry will need an additional 115,000 technicians, engineers and other workers, with 67,000 positions being difficult to fulfill.

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There’s also the matter of cost. Citing 50 percent higher costs, TSMC founder Morris Chang has said that manufacturing chips in the US is “an exercise in futility.” It may not be that bad, but even with subsidies, a chip made on US soil will almost certainly be more expensive than the same chip made in Taiwan or Korea. Surely, foundries and their customers have come to an understanding to bridge the difference in cost, but it’s unclear how US manufacturing can become competitive in the long run. Rounds of subsidies may have to become a recurring phenomenon.