As part of its ongoing battle with China for global supremacy in the semiconductor industry, the United States government has been pouring money into domestic chip manufacturing at an unprecedented rate, according to a recent report from the U.S. Census Bureau.
New figures reveal funding for constructing advanced electronics manufacturing facilities in 2024 alone will surpass the total amount spent over the previous 27 years combined.
The CHIPS Act
This massive influx of investment is driven by the Biden administration’s CHIPS and Science Act – a $280 billion legislative package passed in 2022 to turbocharge the country’s semiconductor industry.
The “Chips Act is attracting an insane amount of investment,” posted Martin Chorzempa, a Senior Fellow at The Peterson Institute for International Economics in Washington D.C.
He continued, “The US is now on pace to add more investment in electronics manufacturing construction this year alone as it did TOTAL from 1996 until passage of the CHIPS Act in 2020. The consequence is, however, that the advanced manufacturing tax credit, which is not capped like the grant money, is going to cost A LOT more than the $24b the CBO estimated”
US brings semiconductor production to America
Major chip manufacturers like Intel, Samsung, and Micron have secured billions to build new advanced fabrication plants across the U.S.
The US is expected to grow its share of advanced logic (below 10nm) manufacturing to 28% of global capacity by 2032, up from 0% in 2022. This matters because there are real concerns in Washington over the security of chips produced in Taiwan – a long-standing US ally- which produces around 90% of all the advanced chips in the world.
If China were to ever successfully invade the island nation to which it lays claim to, the supply of these chips would be controlled by Beijing. That would have huge repercussions for the West.
The chips produced in Taiwan are used for AI and quantum computing applications. Taiwan’s biggest company TSMC ( the eighth most valuable on Earth)is behind all of Apple’s custom chips, also supplying CPUs and GPUs for Apple, Nvidia, Qualcomm, and more.
However, the investments are already paying dividends – a recent industry study found that American chip manufacturing capacity is projected to triple by 2032, with 30% of leading-edge chips expected to be produced domestically by that time.
Not everything has gone smoothly though. Companies are experiencing delays of over a year due to relatively poor regulations that make the U.S. one of the slowest nations for chip fab construction globally.
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