In the last 30 years, American microchip manufacturing has fallen from 37 percent to just 12 percent. With the Covid-19 pandemic creating massive delays in the microchip supply chain, the need for closer sources has emerged as an essential need for American manufacturing.
From the White House:
“Experts estimate that the global chip shortage knocked off a full percentage point from U.S. gross domestic product (GDP) last year. U.S. autoworkers faced furloughs and production shutdowns due to pandemic-driven disruptions in Asian semiconductor factories, contributing to large increases in the price of cars for U.S. consumers. One-third of the annual price increases in core consumer price index (CPI) last year was due to high car prices alone.”
“FACT SHEET: Biden-Harris Administration Bringing Semiconductor Manufacturing Back to America | The White House”
With the current supply and economic issues created from dependence on foreign manufacturing, the ability to produce microchips here in America will help American business. Not only will jobs be created at the manufacturing facilities but also in other sectors that will benefit from the quick turnaround domestic manufacturing allows.
On January 21, 2022, Intel announced they are investing in a $20 billion factory outside Columbus, Ohio. With this tremendous news, the White House added,
“Today’s announcement is the latest marker of progress in the Biden-Harris Administration’s efforts to ramp up domestic manufacturing for critical goods like semiconductors, tackle near-term supply chain bottlenecks, revitalize our manufacturing base, and create good jobs here at home. This investment will create 7,000 construction jobs and another 3,000 permanent jobs, another sign of the strength of the American economy.”
“FACT SHEET: Biden-Harris Administration Bringing Semiconductor Manufacturing Back to America | The White House”
Additionally, legislation is currently sitting in Congress. Should it pass, it would invest in U.S. research and development and manufacturing for critical supply chains, including semiconductors. In June of 2020, Congress passed the U.S. Innovation and Competition Act (USICA) and is currently working to finalize the legislation. Included in the bill is funding for the CHIPS for America Act, which will provide $52 billion for private sector investments to continue American technological leadership.
Since the beginning of 2021, the semiconductor industry has announced roughly $80 billion in new investments in the U.S. through 2025 as reported by the Semiconductor Industry Association. Some of those investments are:
– A $17 billion Samsung factory in Texas, brokered between the United States and the Republic of Korea’s governments
– Texas Instruments investing up to $30 billion in Texas
– A new Global Foundries factory in New York state
– Cree’s intention to spend $1 billion to expand a current plant in North Carolina
– SK Group investments in a new U.S. R&D center
– Micron to expanding U.S. production
Outlook
Being in Central Florida’s technology corridor, Intellitec is proud to be a part of Florida’s electronics manufacturing. Most of what we do requires some form of microchip, and long lead times create a lot of uncertainty. Where in the past, standard lead times for parts were days to a few weeks. The current environment now has those same lead times up to a year and sometimes more as the demand skyrockets with less manufacturing going on.
With these investments and growth, securing parts and building product should become much easier as we navigate ourselves out of this critical time. The pandemic and the resulting industry backlog has shown that we are all in this together. And only together can we pull ourselves out of it, relying on America’s pastime of local manufacturing.
Sources
“FACT SHEET: Biden-Harris Administration Bringing Semiconductor Manufacturing Back to America | The White House.” The White House, https://www.facebook.com/WhiteHouse/,21Jan.2022, https://whitehouse.gov/briefing-room/statements-releases/2022/01/21fact-sheet-biden-harris-administration- bringing semiconductor-manufacturing-back-to-america-2/.