ICYMI there is a semiconductor shortage at the moment.
The US government wants to boost domestic production with $52 billion in investment.
But firms like Micron and Qualcomm are also investing their own money, and creating tech jobs in the country.
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The world is facing a shortage of semiconductors, a very small, but essential component of cars as well as other electrical goods like washing machines, computers, and tablets.
The situation has been compounded by the pandemic, primarily because, according to the World Economic Forum, the demand for these parts dropped as consumers stopped buying certain goods in such high numbers.
As the pandemic began to ease, demand recovered much faster than predicted and manufacturers are struggling to keep up. This is not helped by the complexity of the production of semiconductors – they can take up to four months to make, and that doesn’t take into the time it takes to design the chips and produce them at the correct scale and yield.
In response to this challenge – and to move away from the need to import semiconductors from the two Asian companies (TSMC in Taiwan and Samsung Electronics in South Korea) who control 70% of the manufacturing market – the US government has passed the CHIPS and Science Act. President Biden signed it into law earlier today (9 August).
Billions spent and thousands of American jobs created
The CHIPS and Science Act will see the federal government spent $52 billion on shoring up semiconductor manufacturing and the supply chain in the US.
This funding will support existing manufacturing giants in the US, but they are also pledging to invest their own money in expanding their capacity.
Texas Instruments announced in May that it is going to invest $30 billion in its semiconductor manufacturing process; this is through a $3.5 billion investment every year until 2025, and then additional funding until 2030.
Some of the money will be spent on building two new factories, and the investment is expected to create 3,000 jobs at its manufacturing plants in the Lone Star state.
Just yesterday, US-headquartered tech giant Qualcomm announced it would double its existing agreement with New York-based GlobalFoundries (GF), which is the third largest global semiconductor manufacturer by revenue. The total commitment from Qualcomm is $7.4 billion, according to Reuters.
GF’s president and CEO Dr Thomas Caulfield commented that the deal “secures Qualcomm Technologies as a key long-term customer through 2028 in our most advanced fab in upstate New York, which together with US CHIPS and state funding, will fuel expanding GF’s US manufacturing footprint”.
Today to coincide with the signing of the CHIPS and Science Act, another semiconductor manufacturing giant, Micron technology, has pledged to spent $40 billion by 2030 in leading-edge manufacturing processes.
This will help to create 5,000 jobs at the plant, especially in Idaho and Virginia where its factories are based, and also hopefully another 35,000 across the broader semiconductor sector.
Talking about the $40 billion investment, Micron CEO Sanjay Mehrotra wrote in a blog post: “An investment such as this creates thousands of jobs, both inside and outside of technology manufacturing, and leads to broad industry innovation.
“The Micron investment will also enrich surrounding communities by bolstering education, workforce training, transportation and several other services.”
The White House shared during a press conference about the CHIPS and Science Act that Micron’s investment could boost the US semiconductor market share from 2% to 10%.
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