Reviving American Semiconductor Production: What's Ahead?
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The resurgence of semiconductor manufacturing in the United States is gaining momentum, with the government and private sector collaborating to invest hundreds of billions of dollars into new chip fabrication plants. This article delves into the background, current state, and future prospects of the semiconductor industry in the US.
The roots of semiconductor technology in the US trace back to the mid-20th century when the first transistor was invented at Bell Labs in 1947. This innovation led to the creation of the first commercially successful integrated circuit in 1958. Semiconductor chips, also referred to as microchips, are essential components that regulate electricity flow and process information, serving as the core of modern electronic devices.
In the decades that followed, the semiconductor sector flourished in the US, with major players like Intel and Texas Instruments pioneering advancements in technology and production methods. For many years, the nation led global semiconductor manufacturing, producing a diverse array of microchips for applications ranging from personal computers to automobiles.
Currently, the US holds approximately 47% of the global semiconductor market, largely due to its strength in research and development and chip design. However, this figure masks a troubling trend: the actual share of semiconductor manufacturing has dwindled significantly. In 1990, the US produced 37% of the world's chips, but today, that number has plummeted to just 12%. In contrast, East Asia now accounts for about 75% of global production and has taken the lead in manufacturing the most sophisticated chips.
This decline raises important questions regarding national security and economic stability, prompting industry experts and lawmakers to advocate for new semiconductor fabrication plants, commonly known as fabs, within the US.
Their calls have been answered, as leading semiconductor manufacturers are initiating new projects across the country. The CHIPS Act, recently approved, is set to inject $52 billion into domestic chip production and offer tax incentives, which you can read more about through the provided details on the act.
The establishment of cutting-edge fabs has been on hold for a significant period, but that is about to change. This article will explore the companies leading these initiatives, the nature of their projects, and the locations where they will unfold.
Intel Corporation
Intel, a long-established leader in chip manufacturing, plans to invest over $40 billion in new semiconductor facilities within the US. The company is currently constructing four chip production plants—two in Arizona and two in Ohio—along with an advanced packaging facility in New Mexico.
In late September 2021, Intel commenced construction on Fab 52 and Fab 62 at its Ocotillo campus in Phoenix, Arizona. These facilities are designed to manufacture chips utilizing Intel's 20 Angstrom fabrication technology.
This new production process will be Intel's first to feature its next-generation RibbonFET transistors and PowerVia power delivery methods. These innovations are expected to deliver notable enhancements in power efficiency, performance, and spatial utilization.
Intel's Ohio project, which will initially cost over $20 billion, is set to become the largest economic development initiative in the state's history. The Ohio campus plans to accommodate up to eight semiconductor fabs, necessitating around $100 billion in investments over the coming decade. The initial two fabs will focus on producing chips using Intel's 18 Angstrom and 20 Angstrom technology nodes and are anticipated to begin operations in 2025.
Additionally, an advanced packaging facility is under construction in New Mexico, aiming to integrate multiple semiconductor chips into a single package. This technique is gaining popularity due to its advantages in performance and efficiency, particularly in mobile devices, data centers, and automotive applications.
Taiwan Semiconductor Manufacturing Company (TSMC)
Historically, TSMC has focused on building its fabs in Taiwan, making its announcement to construct Fab 21, a 5-nanometer facility in Phoenix, Arizona, particularly newsworthy.
As the largest semiconductor foundry globally, TSMC manufactures chips for numerous external clients, many of whom are based in the US. The Arizona facility, set to begin operations in 2024, will initially have a much lower capacity than its Taiwanese counterparts, prompting speculation that it may be more a political move to satisfy US demands for a diversified chip supply chain amid geopolitical tensions.
However, TSMC views Fab 21 as a multi-phase project, with the first phase anticipated to go live in early 2024, utilizing the company's N5 process technologies. Additional phases are expected to incorporate more advanced technologies over time.
The choice of Phoenix for the new fab strategically positions TSMC near Intel's existing mega site, providing access to a skilled workforce and suppliers.
GlobalFoundries (GF)
GlobalFoundries emerged in 2009 as a spin-off from AMD, offering diverse manufacturing services, including chip fabrication and packaging. The company has steadily increased production at its Fab 8 since its completion in 2012, announcing a $1 billion investment in 2021 to boost capacity by 26%. This facility plays a crucial role in supplying chips for US military applications.
In addition to enhancing its existing plant, GlobalFoundries plans to establish a new fab in Malta, New York, through a public-private partnership. Details about this new facility remain undisclosed, but it is expected to focus on advanced specialty manufacturing technologies.
Samsung Semiconductor
Samsung is widely recognized for its smartphones and household electronics, but its semiconductor division also plays a significant role in the market. Established in the US in 2005, the division has been producing chips in Austin, Texas, since 2009.
Despite shifting its advanced technology production to South Korea, Samsung has announced plans to develop a new fab near Taylor, Texas, costing $17 billion and expected to begin operations in 2024. This facility will focus on manufacturing chips for 5G, mobile computing, and artificial intelligence applications, potentially utilizing 3-nanometer technology.
Samsung has ambitious plans in Texas, seeking tax breaks for further fabs that could total $192 billion.
Texas Instruments (TI)
Known primarily for its calculators, Texas Instruments is the leading manufacturer of analog chips, which process continuous signals from various sources. The company has seen an unprecedented demand for its products and is currently constructing a new fab near Sherman, Texas, which will be the largest economic project in the state’s history, with an investment of around $30 billion.
The new facility, slated to be built in four phases, will begin production in 2025 and will allow TI to leverage its existing resources and local supply chains.
Micron Technology
Micron Technology stands as one of the largest semiconductor companies globally and the only US-based memory manufacturer. The company plans to invest up to $100 billion over the next two decades to build a mega fab in Clay, New York, with an initial investment of $20 billion by the end of this decade.
Micron's new facility represents the largest private investment in New York's history and will significantly enhance its DRAM production capabilities, aiming for 40% of global output over the next decade.
My Two Cents
The US's renewed commitment to advanced semiconductor fabs marks a pivotal moment in the industry's trajectory. As technology continues to evolve, the importance of semiconductors in our digital interactions cannot be overstated. It is crucial for the nation to prioritize domestic manufacturing in this strategic sector. The incentives from local governments and the CHIPS Act have facilitated these massive investments, positioning the US to leverage its engineering talent and established supply chain for a more diversified semiconductor manufacturing landscape.
The invention of the transistor and the semiconductor chip originated in the US, and the country has historically been at the forefront of this industry. However, we now find ourselves at a critical juncture, needing to catch up.
The pressing question is whether these new American fabs can compete with the ambitious Gigafab initiatives underway in South Korea and Taiwan. The answer remains uncertain, with time as the ultimate judge.
As new fabs near completion, companies face the challenge of recruiting and training the skilled workforce necessary for operations. McKinsey predicts that the semiconductor industry could reach a valuation of $1 trillion by 2030, yet the US may face a shortfall of 300,000 engineers and 90,000 skilled technicians in the coming years. Semiconductor firms may need to offer competitive salaries to attract the talent they require. Thus, students with interests in science and engineering may find the semiconductor industry to be an appealing field.
What are your thoughts on the future of semiconductor manufacturing in the US? Feel free to share your insights in the comments—I’ll do my best to respond to all serious inquiries!
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