Semiconductors: Joe Biden will sign legislation to boost production in the US
Two years of tough negotiations, the search for compromises and heated arguments have finally paid off. After getting the green light from the Senate and House of Representatives last week, the Chips and Science Law now awaits US President Joe Biden’s signature to go into effect.
If the road to the appearance of this law has been long, the result is far from negligible and marks the return of proactive industrial policies in the United States with great fanfare. 280 billion will be invested, of which 52.7 billion will be used to support the production of semiconductors on American soil and research into this technology with the help of subsidies. Another 24 billion will be spent on tax incentives for the same purpose. The remainder of the $280 billion must be invested in research related to critical technologies, clean energy development, nuclear physics, and allow NASA to prepare for future missions to the Moon and Mars.
Semiconductor factories are already springing up like mushrooms
The law’s impact was already being felt before it came into force, as several semiconductor manufacturers, including Intel, Taiwan Semiconductor Manufacturing Co. (TSMC) and GlobalFoundries, have started building foundries in states expecting to eventually benefit from the subsidies benefit the law is passed.
Intel CEO Pat Gelsinger, in office since January 2021, has made this goal one of his priorities. After last year announcing its intention to invest $20 billion in two manufacturing facilities in Arizona, the company recently doubled down with a similar investment dedicated to opening two more factories in Ohio, in the heart of the US state rust belt.
” The pandemic has shown that the industry is far too geographically concentrated today (80% of the chips used worldwide are produced in Asia), with the associated risks. We want a global industry that is more resilient and we believe the best way to achieve this is to build strong local industries so that production capacity is better shared ‘ he recently confided to La Tribune.
Also in Arizona, the Taiwanese giant TSMC is considering building its first semiconductor factory on American soil, in which it has invested $12 billion. For its part, GlobalFoundries, another American industry giant, will spend between $6 billion and $8 billion to build a new factory in Saratoga County, New York.
A bipartisan attempt to counter the Chinese dragon
In both the Senate and House of Representatives, the bill received support from several elected Republicans, including Senate Republican Minority Leader Mitch McConnell. A rather rare bipartisan agreement in a very divided American political landscape. When at odds on the country’s internal affairs, however, the two parties agree more easily on foreign policy.
However, the desire to move semiconductor production to national soil is mainly motivated by the rise of China and the threat of a Middle Kingdom invasion of Taiwan. ” It is no exaggeration to say that semiconductors are the be-all and end-all of our technological competition with China. ‘ confirmed Pentagon No. 2 Kathleen Hicks at the end of July.
The United States retains a dominant position in high-end semiconductor design thanks to giants like Intel, Qualcomm and Nvidia. On the other hand, the country has weakened its position in favor of Southeast Asia when it comes to the physical manufacture of chips: only 12% of the world’s microprocessors are manufactured in the United States, down from 37% in 1990. A decline in the Chips & Science Act is aimed at this off to contain.
Its defenders have therefore pointed to the major subsidy policies of Southeast Asian countries, particularly Taiwan and South Korea, which have allowed them to produce national champions such as Taiwan’s TSMC, which alone melts 60% of the world’s microprocessors. During her recent visit to Taiwan, which greatly angered the Chinese leadership and prompted the country to conduct major military maneuvers near the island, Speaker of the House Nancy Pelosi arranged to meet leaders of this company, which the United In the face of growing threats from China, states are tempted to persuade them to decentralize its production. Beijing has never recognized Taiwan’s sovereignty, and President Xi Jinping recently announced the ” reunion with the island in one of his speeches.
Industry’s dependence on Taiwan worries everyone
” The aim is to reduce the world economy’s dependency on Taiwan, which is currently under threat from China. TSMC pioneered the construction of a foundry in Phoenix, Arizona. They also want to increase their manufacturing activities in Japan says Russ Shaw, founder of Global Tech Advocates, an international network of new technology players.
” If we add the context of the shortage, we understand that semiconductors have become a strategic issue for the United States, but also for the United Kingdom and Europe. The United States has been quick to mobilize the public and private sectors, with Samsung announcing construction of a new factory in Texas, Intel investing in Ohio and now the Chips & Science Act about to be signed. The European Union and the United Kingdom are making similar efforts.
This is all part of an important long-term strategy that I hope these countries will uphold. In a turbulent geopolitical context, we need to ensure there is a competitive environment to mitigate risks. Concentrating production in one country is not sustainable. »
