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The US government and domestic chipmakers strengthened separate efforts this week to pass the $ 52 billion CHIPS Act of stimulus measures. The CHIPS Act currently awaits congressional approval, warning of strategic vulnerabilities now and in the future.
US Secretary of Commerce Gina Raimondo and other White House officials on Apr. 6 briefed members of Congress on economic and national security vulnerabilities resulting from a lack of domestic chip production. Over 70 percent of global production is in Asia, including the most advanced chips, while only 12 percent is located in the US, the Department of Commerce (DOC) said.
Separately on Apr. 6, US chipmakers Intel, Micron, and Analog Devices joined the Semiconductor Alliance, announcing an agreement to accelerate chip R&D and prototyping to build a more robust domestic industry. This includes advanced manufacturing amid increased global competition.
“A significant interruption to our supply of semiconductors could cause historic damage to the US economy – damage far greater than the impact of chips shortages on the American auto industry right now – and would undercut our technological competitiveness and military advantages over adversaries globally,” the White House said.
Demand for semiconductors in 2021 rose 17 percent from 2019, while supply increases failed to keep up, according to DOC analysis. The shortage cut $ 240 billion – or about one percentage point – from US GDP growth in 2021, according to the DOC.
The auto industry produced 7.7 million fewer cars in 2021 due to chip shortages, the DOC said. Companies also lost more than $ 500 billion worldwide, including $ 210 billion in the auto industry in 2021, according to Deloitte.
“The fragile supply chain for semiconductors puts virtually every sector of the economy at risk of disruption,” the DOC said.
“The US, as well as our allies and partners, must take significant and immediate steps to resolve these supply-chain vulnerabilities,” the DOC said. “First and foremost, Congress must fund the CHIPS Act in full to increase domestic production of semiconductors. However, CHIPS is just one piece of the puzzle, as it is a necessary but not sufficient condition for long – term US technological leadership. ”
While US legislators prepare to approve the $ 52 billion package of incentives to help shore up the domestic industry, there are concerns that most of the financial support will go to very profitable chipmakers that don’t need assistance. All while more vulnerable parts of the electronics ecosystem go neglected.
The Semiconductor Alliance
The Semiconductor Alliance, led by MITER Engenuity, was developed in 2021, and its principles were published in a white paper on American Innovation for American Growth. The white paper summarizing the Alliance’s whole – of – nation call to action for a National Semiconductor Technology Center (NSTC).
“The semiconductor industry in the US is at an inflection point. There has never been a more important time to come together as an industry to establish the path forward to advance the foundation of innovation that will help solve the nation’s biggest challenges, ”said Ann Kelleher, general manager of technology development at Intel.
The Semiconductor Alliance will leverage current and future R&D investments by industry and government in the US and support the CHIPS Act to re-establish American industry leadership, according to Micron.
“The spirit of collaboration from which our industry was born and has made so much innovation possible, has never been more critical for the future of America’s semiconductor leadership and our long-term national competitiveness,” said Scott DeBoer, executive vice president of Micron’s Technology and Products organization.
Since 2021, the chip industry has announced nearly $ 80 billion in US investments, adding that China has committed $ 150 billion in funding over the decade to increase its domestic production, according to the DOC. South Korea and Taiwan have invested heavily to maintain global leadership in their chip ecosystems, while the EU, Japan and India are preparing to fund development as well, the DOC said.
Laurie Giandomenico, Miter Engenuity leader, said “The United States has an opportunity for generational impact in the face of growing strategic competition with China. By forging innovative partnerships based on trust and neutrality, Intel, Micron, Analog Devices, and Miter Engenuity through the Semiconductor Alliance are aligning the interests of industry, government, and universities to collaborate and grow the semiconductor industry on US soil. ”
A secure and reliable supply of chips is critical to national security, according to the DOC. “Advanced semiconductors are integral to an array of critical national security capabilities, including sophisticated weapons systems such as the Javelin antitank missiles the US is supplying to Ukraine to defend itself against the Russian invasion,” the DOC said.
In a Department of Defense (DOD) industrial base review, the DOD noted “State – of – the – art microelectronics are DOD’s primary differentiator for asymmetric technology advantage over potential adversaries.”
DOD’s unique microelectronics requirements are small in overall financial terms, representing only 1–2 percent of total US demand. However, these needs drive many of the capabilities that are most critical to the DOD’s ability to defend the US, the DOC said.