The U.S. may soon see a resurgence in microchip manufacturing, thanks to new provisions in the National Defense Authorization Act (NDAA) for FY 2021 that was recently passed by Congress.
These provisions could result in significant financial incentives for building or modernizing facilities that produce, assemble, test, package or perform R&D on semiconductors.
American researchers continue to lead in semiconductor research and design, and microchips are already the country’s fifth largest export, with commercial silicon wafer manufacturing facilities (“fabs”) in 18 states. However, most global production occurs in Asia, according to the Semiconductor Industry Association (SIA).
“Semiconductors were invented in America and U.S. companies still lead the world in chip technology today, but as a result of substantial government investments from global competitors, the U.S today accounts for only 12 percent of global semiconductor manufacturing capacity,” said Keith Jackson, president, CEO, and director of ON Semiconductor and 2020 SIA chair.
This is especially true of China, whose presence in the sector is expanding rapidly—leading the NDAA to call it a national security issue. While China may lag behind the U.S. in semiconductor R&D, it’s within reaching distance of foundries that use the most advanced chip manufacturing technologies in the world: Samsung in South Korea and Taiwan Semiconductor Manufacturing Company (TSMC) in Taiwan.
These are the only two companies with factories that deploy the five-nanometer node process to produce chips. These chips are used in mobile phones, data centers and vehicles, among other applications. These two facilities manufacture the chips for U.S. technological heavy hitters including AMD, Google, Facebook and Qualcomm; and TSMC chips can be found in U.S. 5G networks and American fighter jets. In recent years these companies have surpassed their U.S. competitor, Intel, in production capability.
In fact, TSMC intends to invest up to $12 billion on a 5-nanometer production facility in Arizona through a wholly owned subsidiary—a significant step forward for domestic chip production, even if the funding is coming from across the Pacific.
However, the NDAA’s provisions have the potential to unleash increased domestic investment in the sector. The SIA anticipates that a $20-billion incentive program over 10 years would result in a $174 billion in investment and 14 new fabs. In addition, a $50-billion program would attract $279 billion in investment funding and 19 fabs.
“The next step is for leaders in Washington to fully fund the NDAA’s domestic chip manufacturing incentives and research initiatives,” said Bob Bruggeworth, SIA chair and president and CEO of Qorvo, a radio frequency (RF) chipmaker.
The NDAA also sets out measures authorizing microelectronics R&D, the development of a more secure microelectronics supply chain and the creation of a National Semiconductor Research Technology Center that would help transition R&D innovations into industrial facilities. In addition, the legislation boosts the development of strategies to add capacity in cutting-edge research, including quantum computing and artificial intelligence.
Read more about the microchip industry at What Raw Materials Are Used to Make Hardware in Computing Devices?