US chip production is poised to explode in coming years, helping ease a risky dependency on East Asia, according to a projection by the Semiconductor Industry Association.
Semiconductor manufacturing capacity in the country will triple by 2032, an SIA-commissioned study by the Boston Consulting Group found. That will take the US share of the industry to 14%, up from 10% currently, according to the report, which was released Wednesday.
The surge will reverse a downward trend for domestic chip production, which had been decamping for Asia in recent decades. Were it not for government funding programs like the 2022 Chips and Science Act, the US share was on course to shrink to 8%, the study found.
The Washington-based SIA, which lobbied hard for the Chips Act, is eager to show that the legislation is paying off. It also wants the government to devote more funding to the cause.
“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,” SIA Chief Executive Officer John Neuffer said in an interview. “Our industry fully understands that we have an over-concentration of manufacturing in East Asia.”
The Chips Act set aside $39 billion in grants — plus $75 billion in loans and loan guarantees, and 25% tax credits — to persuade semiconductor firms to build factories on American soil. In the wake of that legislation, the US has secured commitments from all five of the world’s top chipmakers to add facilities in the country. That includes the three main manufacturers of cutting-edge logic chips, the components that serve as the brains of devices: Taiwan Semiconductor Manufacturing Co., Samsung Electronics Co. and Intel Corp.
US Commerce Secretary Gina Raimondo, whose agency is responsible for doling out Chips Act funds, has said the US aims to produce one-fifth of the world’s advanced logic chips by the end of the decade.
Building some extra capacity also will help protect against the kind of disruptions that occurred during the pandemic, Neuffer said. But that represents a shift away from the industry valuing efficiency above all else.
The US isn’t the only one increasing its chip manufacturing ambitions, according to the report. Mainland China is building about 30 new facilities for parts of the chip supply chain, topping the US’s 26. And there are eight such projects under way in the European Union.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
