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The Semiconductor Industry Association and BCG released a report last month forecasting the semiconductor industry’s growth over the next decade. Not surprisingly, the passing of the CHIPS Act in 2022 positions the US well to capture a greater market share of the global semi industry. But it’s not all silicon and smiles.
The Good News
80 semiconductor manufacturing projects across 25 states, totaling $450 billion in investments. The CHIPS Act was passed on August 9th, 2022. $450 billion in less than two years is insane.
To put that in perspective, the IRA Act aimed at clean energy investment was passed a week later. Since then, $124 billion has funded 316 new projects across 41 states. It’s still a huge amount. But there’s been 3.5x more investment in semiconductors alone than there’s been in battery, EV, solar, wind, geothermal, biofuel, and hydrogen projects combined.
After crude oil, refined oil, and cars, semiconductors are the world’s fourth most traded product.
Specific Stories of Semiconductor Investments in the US
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Intel in Ohio: Intel announced a $20 billion investment to build two new semiconductor manufacturing facilities in Licking County, Ohio. This project is expected to create 3,000 permanent jobs and bolster the local economy. Intel’s commitment to Ohio represents a significant milestone in the US semiconductor industry, aiming to boost domestic chip production.
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TSMC in Arizona: Taiwan Semiconductor Manufacturing Company (TSMC) is investing $12 billion in a new manufacturing plant in Phoenix, Arizona. This facility, slated to begin production in 2024, will produce advanced 5-nanometer chips. The project is a crucial part of TSMC’s strategy to expand its global footprint and supply US tech companies.
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Samsung in Texas: Samsung is making a $17 billion investment to build a new semiconductor manufacturing facility in Taylor, Texas. This plant, which is expected to be operational by 2024, will focus on producing advanced logic devices. Samsung’s investment is one of the largest foreign direct investments in the US and will create over 2,000 high-tech jobs.
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Micron in New York: Micron Technology announced plans for a $100 billion investment over the next 20 years to build a massive semiconductor fabrication facility in Clay, New York. This project is expected to create tens of thousands of jobs and make New York a critical hub for semiconductor manufacturing in the US.
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Texas Instruments in Texas: Texas Instruments is investing $30 billion to build four new semiconductor wafer fabrication plants in Sherman, Texas. This expansion is aimed at meeting the growing demand for analog and embedded processing chips. The new facilities will significantly increase TI’s production capacity and support the local economy with thousands of new jobs.
The Not As Good News
Semiconductor manufacturing uses 300 different inputs. Depending on the chip, there can be 400-1400 steps in the manufacturing process, and it can take up to 20 weeks to make a single chip.
While the diversification of the supply chain has created tremendous value for shareholders across the globe, globalization doesn’t come without risks. For example, the report found that “there are more than 50 points across the value chain where one region holds more than 65% of the global market share.” And for the most advanced chips (below 10 nanometers), 100% of the manufacturing capacity is located in Taiwan.
What's Next?
The report’s conclusion: another $50 billion in federal incentives is needed to meet the semiconductor demand for critical sectors. They call for 15 new fabs for advanced chips for defense/aerospace, telecom networks, energy/security/medical equipment, and essential/government data centers.
