containerdiscovery.com
us emerges as semiconductor superpower with tripled production by 2032 2384

Technology

US Emerges as Semiconductor Superpower with Tripled Production by 2032

reading

Lauren Miller

May 8, 2024 - 09:16 am

reading

US Semiconductor Production Set for Tripling by 2032 as Industry Reduces Dependence on East Asia

In a significant development for the US semiconductor landscape, the production of chips is forecasted to witness a dramatic expansion in the forthcoming decade. This upsurge is expected to substantially mitigate the current over-reliance on East Asian manufacturing capabilities, according to an industry report.

The Semiconductor Industry Association (SIA), in collaboration with the Boston Consulting Group, has released a comprehensive study projecting that the semiconductor manufacturing capacity in the United States is on track to triple by the year 2032. This monumental growth is anticipated to bolster the US share of the global semiconductor industry from the current 10% to an impressive 14%.

Reversal of Domestic Production Decline

The explosion in chip production marks a reversal of a long-standing trend that saw US semiconductor production steadily moving towards Asia over the past several decades. The turnaround is largely attributed to support from the federal government, particularly referencing the Chips and Science Act of 2022. Without this legislative backing and its funding programs, the study revealed that the US semiconductor industry was facing a potential decrease to an 8% global share.

The SIA, headquartered in Washington D.C., played a pivotal role in advocating for the passing of the Chips Act. This vital piece of legislation has been heralded as a substantial first step in revitalizing and sustaining the domestic semiconductor industry.

The Chips Act: Spurring Growth and Innovation

One of the core objectives of the SIA is to ensure continuous government support to further strengthen the industry. "We’ve always said that the Chips Act was a strong first step, but we’re going to need more to get to the promised land," commented John Neuffer, the Chief Executive Officer of the SIA. He further emphasized the glaring issue of an over-concentration of manufacturing in East Asia, which the industry acknowledges and seeks to address.

The Chips Act has been a catalytic policy, earmarking an unprecedented $39 billion in grants, along with a hefty $75 billion in loans and loan guarantees. Additionally, the Act offers an alluring 25% tax credit to entice semiconductor firms to establish their facilities within the US. Spurred by this legislation, major strides have been taken by the leading chipmakers of the world, with all of the top five firms committing to expanding their manufacturing presence in the United States.

Global Semiconductor Leaders Bet on America's Future

This commitment includes the top manufacturers crucial for the production of cutting-edge logic chips— the vital components that constitute the central processing units of myriad devices. This advanced semiconductor triumvirate—Taiwan Semiconductor Manufacturing Co. (TSMC), Samsung Electronics Co., and Intel Corp.—have each laid plans for new American facilities.

The US Commerce Secretary, Gina Raimondo, who is at the helm of administering the disbursement of Chips Act funds, has outlined an ambitious vision. She anticipates that by the end of the current decade, the United States will be responsible for manufacturing one-fifth of the world's supply of advanced logic chips.

A Shift in Industrial Values

The drive to increase chip production capacity is not just about market share and economic growth—it's also about resilience. As John Neuffer pointed out, expanding manufacturing capacity within the United States will provide a safety net against the type of supply chain disruptions that swept the globe during the pandemic. It represents a fundamental shift in industry priorities, from an overarching emphasis on efficiency to a newfound value on robustness and security.

Despite the positive forecast for the US, it's not the only nation with grand plans to scale up its semiconductor industry. The report also highlights that Mainland China is forging ahead with approximately 30 new facilities pertaining to various segments of the chip supply chain. That exceeds the 26 similar projects that have been initialized in the US, alongside eight in the European Union.

The implications of the semiconductor production expansion go far beyond economics, touching aspects of national security and geopolitical influence. This has been increasingly recognized in global discussions, spotlighting computer chips as the focal point in a new technology-driven arms race.

Ensuring a Competitive Edge

As the semiconductor industry has swiftly moved to the forefront of international attention, the US is positioning itself as a key player in shaping the future of technology. This renewed focus underscores the strategic importance of semiconductors, paralleled by the government's substantial investment in domestic production capabilities. By ramping up American manufacturing infrastructure, the aim is not only to reduce dependency on a single geographic region but also to ensure that the United States maintains a competitive edge in a domain critical to military, commercial, and consumer technologies.

Conclusion and Prospects for the Future

The future landscape of semiconductor manufacturing in the United States is being reshaped by strategic governmental intervention and industry commitment. This reinvigorated approach to chip production underlines its indispensability both in times of global crisis and peace. With the effectuation of the Chips Act, the US has sparked a new era of technological advancement and economic fortification, setting a benchmark for others to follow.

As the decade unfolds, the ripple effects of this surging production capacity will be observed across multiple sectors—driving innovation, ensuring supply chain resilience, and bolstering national security. The US semiconductor industry's trajectory towards growth, autonomy, and global leadership is set, with the collaborative efforts of the public sector, private corporate powerhouses, and international stakeholders.

While the projections are promising and the commitments are firm, actualizing these ambitious goals will require sustained effort, investment, and perhaps most crucially, a spirit of innovation that is the hallmark of the semiconductor industry. As such, the Semiconductor Industry Association's call for more substantial and ongoing governmental support is not just a plea but a strategic roadmap for the United States to anchor itself as a semiconductor powerhouse in an increasingly digital and interconnected world.

The full report detailing the projected expansion of the US semiconductor industry, the influence of the Chips Act, and the international competitive landscape can be found through the Semiconductor Industry Association’s publication, released in partnership with the Boston Consulting Group.

For updated and detailed information regarding US chip production and related developments, please visit SIA - Semiconductor Industry Association and Boston Consulting Group.

Bloomberg

©2024 Bloomberg L.P. All Rights Reserved.