U.S. Fab Capacity Could Triple in a Decade - IEEE Spectrum

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In 2022, the United States fabricated 0 percent of the world’s most advanced logic chips. By 2032, that share could rise to 28 percent.

So says a new report from the Semiconductor Industry Association (SIA) and Boston Consulting Group. If the report’s prediction pans out, the country should meet U.S. Secretary of Commerce Gina Raimondo’s ambitious goal of producing 20 percent of the world’s “leading-edge logic chips” by 2030. Raimondo announced the goal in February at an event hosted by the Center for Strategic & International Studies (CSIS), a think tank.

The government’s chief tool in service of that goal is the CHIPS and Science Act, or CHIPS Act. Enacted in 2022, a key part of the much larger act dedicates US $39 billion in subsidies for creating or expanding U.S.-based semiconductor fabs and an additional $11 billion in research and development. This money alone will not create fabs from thin air, but analysts say that the funds form a promising start and that 20 percent by 2030 is a serious target.

“I think that is a stretch goal but a possible one,” says Mark Muro, a senior fellow at the Brookings Institute.

The Commerce Department, responsible for disbursing the CHIPS Act’s subsidies, initially garnered criticism for a sluggish start. It had to set up a structure for distributing a total several times larger than the department’s annual budget. Nevertheless, award announcements began last December, and the department has since dedicated, though not yet distributed, more than half of the $39 billion.

“I don’t think there’s been any major surprises” regarding which firms are getting the funds, says Ryan Mulholland, a senior fellow at the Center for American Progress.

The highest-profile awardee may be TSMC, which gained $6.6 billion for its expansive Arizona project—planned to contain three fabs utilizing 4-N and more advanced process technologies, which today only exist in Asia. Intel, Samsung, Micron, and GlobalFoundries are also promised multibillion-dollar subsidies for leading-edge and other fab capacity. More modest awards have gone to Microchip Technology and BAE Systems for upgrading and modernizing legacy-node fabs.

“I would expect the remaining investment to go to the sort of firms that build out the supply chain that the larger semiconductor manufacturers rely on,” Mulholland says. These will likely include smaller investments in producers of memory chips, wafers, and process chemicals, he says.

Actually, the CHIPS Act’s $39 billion is dwarfed by the more than $300 billion of private investment that companies have pledged to U.S. semiconductor manufacturing since 2022. Many firms want to take advantage of another CHIPS Act provision, which establishes a tax credit worth 25 percent of a firm’s investment in a manufacturing facility in a given year. In fact, the SIA report predicts the United States will attract 28 percent of global capital expenditures in semiconductors from 2024 to 2032. SIA says this figure is a direct consequence of the CHIPS Act, without which the country would have attracted only 9 percent.

The result, according to the SIA report, is that U.S. fab capacity will increase by 208 percent from 2022 to 2032.

“What you’ve seen is a very rapid movement on the part of these firms to actually get construction started,” said Sujai Shivakumar, a senior fellow at CSIS.

But these results are not guaranteed. Even fully funded fab projects take years of strenuous effort to move from planning and construction to actual operation. “These are incredibly complicated and sizable facilities, so the actual launches of the plants are themselves pretty Herculean challenges,” says Muro.

Some of the hurdles may be familiar to any multibillion-dollar endeavor: the uncertain costs of years-long construction, potential delays from environmental reviews, and market headwinds that are outside government control. But the largest challenge of all will likely be staffing the new and improved fabs. The United States simply does not have enough properly skilled workers, according to SIA. In a report from July 2023, the trade organization found that more than half of newly created jobs in U.S. semiconductors by 2030 were on course to go unfilled, including 80 percent of technical, engineering, and computer science jobs.

Many CHIPS Act awardees are building large-scale facilities in places like Ohio that aren’t historical semiconductor hubs and lack the skilled workforce. TSMC, for example, cited a shortage of skilled workers as a reason for delaying the start of production in Arizona. The CHIPS Act does include support for education, but many analysts don’t believe it goes far enough; they are calling for additional measures, such as a lower barrier for immigrants with the requisite skills.

Overall, however, analysts are optimistic that the CHIPS Act has given the U.S. semiconductor industry a boost that puts that 20 percent goal within reach. “It’s an aspirational goal, but I think we’re on track,” says Shivakumar.

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U.S. Fab Capacity Could Triple in a Decade - IEEE Spectrum

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