Plans to Expand U.S. Chip Manufacturing Are Running Into Obstacles (2024)

FAQs

Is chip manufacturing coming back to the US? ›

US chip manufacturing capacity is projected to triple by 2032, according to a new report published by the Semiconductor Industry Association (SIA), signaling progress nearly two years after President Biden signed the CHIPS and Science Act into law.

It's about 30 percent more expensive with no government support to build a chip factory in the U.S. as it is abroad because of the subsidies and other factors. So they're trying to basically even it out, so if you're Intel, it's essentially neutral as to where you build your plant. What exactly are semiconductor chips?

Do you mean design, or manufacture? Design takes a long time because the more complex chips are extremely complicated, and each attempt to build one is extremely expensive. Small chips are relatively quick to produce. But larger chips will have design teams of tens of people working for months.

Despite US subsidies, challenges just about to begin for TSMC and Samsung. TSMC and Samsung Electronics stand to gain from subsidies provided by the US government to a lesser extent, according to sources at semiconductor equipment companies.

Thirty-eight of the semiconductor fabs being built are located in East and Southeast Asia, most notably China, Taiwan, South Korea, and Japan. That's just over half of the total new planned fabrication plants around the globe. Out of the 35 fabs being built in the West, 27 (77%) are being built in the United States.

And as to semiconductors, 83 percent of total manufacturing capacity for semiconductors now resides in South Korea, Taiwan, China, and Japan as does most all of consumer electronics manufacturing and that of electronics in general. The U.S. share of the world's semiconductor fabrication capacity is now 8 percent.

Taiwan. Taiwan is the world's undisputed leader in semiconductor manufacturing, primarily due to TSMC's dominance in the foundry business.

China's challenges

The first is that it's more expensive to produce the semiconductors than if more advanced tools and machinery were used. The second is an issue around yield — the number of usable chips that are produced and can be sold to customers. With older equipment, the yield is also lower.

Another contributing factor is that demand is so great that existing production capacity is unable to keep up. Other causes have been attributed to the China–United States trade war and the 2021 drought in Taiwan.

Silicon, the primary semiconductor raw material for wafer fabrication, is vital in the chip production process. Wafer, or semiconductor silicon wafer, acts as a crucial component in the initial stages of chip manufacturing, serving as the 'vessel' to transform integrated circuit designs into physical chips.

Are chip factories bad for the environment? ›

Each semiconductor factory can also consume more than 1 million gallons of water daily, in addition to producing thousands of tons of chemical waste annually. What's more, the challenges of mitigating these environmental hazards could soon become even harder.

Microchips are made by building up layers of interconnected patterns on a silicon wafer. The microchip manufacturing process involves hundreds of steps and can take up to four months from design to mass production.

TSMC is now the world's largest semiconductor maker by revenue, beating Intel and Samsung: Analyst. Bigger than Intel, Nvidia and Samsung.

“However, once TSMC joins us in the race for two-nanometre technology, Samsung will lead the way. Within five years, we can surpass TSMC.”

In the 1980s, six of the top 10 chip manufacturers were Japanese. The country's manufacturers controlled about half the market in 1988. But Japan's chip dominance faded due to a combination of changing market trends, the rise of new competition, and geopolitical pressure.

Micron is pushing ahead with building a $15 billion factory in Boise, Idaho, its hometown, and plans an even bigger manufacturing complex near Syracuse, N.Y., despite a downturn in the market for its memory chips, which store data in devices like smartphones and computers.

Amid continuing mixed signals about the economy, one notable bright spot is the revival of U.S. manufacturing. The surprising strength of this once-battered sector holds promise for reenergizing the U.S. economy overall, and despite troubles in Europe, its new vigor may provide a boost to the global economy.

There is a large number of semiconductor companies in the US. The government initiatives are also creating a conducive environment for the growth of the industry.

Many market analysts agree that the supply chain should be restored to normal capacity and production by the end of 2023 and continue for the next three to five years, with the shortage of AI chip supplies alleviated by the end of 2024.