CHIPS Act to Revitalize the U.S. Semiconductor Manufacturing Industry

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Pressure has grown in the U.S. to act to shore up its own manufacturing base in advanced semiconductor manufacturing, and the culmination of that was the CHIPS and Science Act.

www.eetasia.com, Aug. 31, 2022 – 

A recent study by the U.S. Congressional Research Service (CRS) estimated that the U.S. share of global semiconductor manufacturing has dropped down from 40% in 1990 to 12% in 2020.

As the cost to build domestic fabs in the U.S. surged, a lot of companies went fabless, using die manufactured in some of Asia's dominant foundries and then finishing the back-end test/packaging either at their own or other assembly/test companies also located in Asia. Users of the most advanced chips today, such as Google, Apple, and Amazon, are reported to rely on TSMC, most of whose fabs are located in Taiwan, for almost 90% of all their advanced chips. The Covid-19 pandemic and the war in Ukraine have also highlighted the fragile and highly globalized supply chain, with a lot of raw materials needed for semiconductors located in countries that are either in regions of global tension or affected by their own dependence on such countries. For example, market research company Techcet has estimated that large portions of semiconductor-grade rare gases such as neon are produced in Ukraine. Ultra-high–purity wet chemicals, such as sulphuric acid, used in semiconductor manufacturing are also largely imported from Asia.

Amongst this backdrop, pressure has grown in the U.S. to act to shore up its own manufacturing base in advanced semiconductor manufacturing, and the culmination of that was on Aug. 8, when President Biden signed the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act. The broad goal of this act is to subsidize new investment in domestic manufacturing capacity. The CHIPS Act immediately provides $53.7 billion to various aspects of U.S. semiconductor manufacturing.

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