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Sunday, November 28, 2021

All Talk and Nothing Done Keeps America Last in Semiconductors

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This year has been a year like no other in the global supply chain, and it has affected almost every sector under the sun. Much of the supply chain crisis can be traced back to the semiconductor industry, where great shortage It was because demand outstripped supply, which had an impact on everything from laptop chargers to the auto industry. A year later, the fallout has been dire and pleas to Washington have sparked little action, while manufacturing strongholds in Asia have pledged billions of dollars to increase capacity and dominance in the chip industry.

Earlier this month, Senate Majority Leader Chuck Schumer told the Senate floor that he plans to attach a $ 250 billion expansionary plan to Congress’ annual defense authorization bill that would address the troubled industry. semiconductor industry. It may seem like Washington is finally taking the problem seriously and beginning to understand its scope, but it already passed a $ 52 billion law in June. CHIPS Act, which has stalled in the House of Representatives for the past six months. Now the Senate is taking another chance by adding those CHIPS funds and more to the National Defense Authorization Act, a must-have annual defense policy bill.

The US semiconductor slippage

Nearly three decades ago, the United States was a manufacturing bastion, producing 40% of the world’s semiconductors. Today that number has plummeted to just 12%. This has had a direct impact on a number of US-based industries, including automotive, defense, and technology, as well as the millions of Americans who work in these sectors. As the United States’ contribution to global semiconductor supply has declined, there has been a simultaneous and exponential increase in demand for semiconductors that are being met by international markets in Asia, specifically China, where most of the industry is located. Supply Chain. This hyper-concentration of supply is a factor that guarantees a slow recovery.

A step in the right direction?

Despite the impact of the label that some may experience with the CHIPS Act’s $ 52 billion price tag, that sum would only finance the cost of spinning two 3nm chip factories, well below what it would take to make America competitive in manufacturing again. The $ 250 billion suggested by Senator Schumer to stimulate research, development and manufacturing of domestic chips is much more aligned with need and is similar to the policy enacted after World War II that allowed the United States to become the world leader in technological innovation.

Based on current legislation, the US makes it clear that semiconductors are at the center of the future of emerging technologies. But the questions that need to be answered are:

  1. Is this the right amount of money for the United States to be globally competitive in technological innovation?
  2. When will the grant money be distributed to allow companies to create new products?
  3. Where and how will the money be allocated?
  4. Is an industrial policy what is really needed? Most, if not all, of the major US semiconductor companies are crammed with cash on their balance sheets.
  5. Should the money be concentrated on R&D and new technology commercialization companies in front of established players?

When we assess how other nations are encouraging chip production, it becomes clear where we are lagging. Various Asian governments actively subsidize and support domestic chip industries, leading to a single global source for the most advanced logic chips that power our technology sector. Remember, semiconductors are the backbone of modern electronics. Everything from cars to smartphones to even washing machines depends on these chips. Asia’s unfree markets approach allows its large companies to thrive without factories, while foundry services continue to struggle without subsidies. We are seeing this ripple effect in American manufacturing in real time.

Even with the right amount of government funding and support, experts warn that the global chip crisis could continue beyond 2022. It could take two years to get the new manufacturing equipment needed to add chip capacity, so it won the impact of immediate funding ‘will potentially be felt until 2024.

Given the severity of this crisis and the critical role that technology plays in national security, one must wonder why Washington has seen America’s share of semiconductor manufacturing plummet at a worrying rate while consistently ignoring warnings and orders. industry help. There simply has not been enough recognition of the magnitude of semiconductor requirements by those in DC Addressing the problem and executing the necessary solutions are paramount in this situation, but hopefully our government can properly identify and work proactively to address these. difficulties in the future. .

This is truly an urgent issue that our government officials must address with the utmost urgency. With each passing day that the CHIPS Act is not funded, America’s control over semiconductors falls further, while Asia is rapidly gaining additional control of this crucial industry. Our country’s national defense is at stake, so why aren’t legislators taking this more seriously?

Mark Granahan is Founder and CEO of IDEAL Semiconductor.


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