What Does 'Made in America' Mean for Semiconductor Supply Chain?

The industry is buzzing with news of TSMC’s $100 billion semiconductor manufacturing deal. In a move that promises to streamline electronic component supply chains and alleviate long-standing bottlenecks, TSMC plans to build state-of-the-art, US-based semiconductor production facilities over the next four years.

However, as tech giants like Microsoft are working to revive aging infrastructure—such as reactivating Three Mile Island’s nuclear facility to fuel the growing demand of AI innovations—one has to wonder: Is America’s broader infrastructure truly prepared to support the ambitious goal of reclaiming its place as a global semiconductor powerhouse?

Answering the Call for Global Restructuring

Many younger generations may not realize that the United States was once a global leader in semiconductor manufacturing. Back in 1990, 80% of the world’s semiconductor chips were made in the US and Europe. Fast forward to today, and Asia – primarily Taiwan– now produces around 80% of the world’s semiconductors.

In a 2023 MIT presentation aimed at revitalizing the so-called Rust Belt into the “Silicon Heartland,” Intel’s CEO, Pat Gelsinger, highlighted the dangers of such concentrated production, stating, “The engineering, the innovation is never done. If we are going to be an innovator at the heart and soul of the digital future, we must be a manufacturer at scale.” With the US now responsible for just 12% of global semiconductor output, Gelsinger’s call for action feels more urgent than ever.

Impact on Semiconductor Lead Times

With the current structure of semiconductor lead times (Figure 1) relying on Asian chips, an “American-Made” restructuring is positioned to significantly reduce shipping times and vulnerabilities to global supply chain disruptions.

By establishing more domestic production facilities, like those planned under the CHIPS Act, the US can shorten the supply chain and expedite production cycles. Localizing production would not only reduce delays but also enable quicker responses to demand shifts, providing a more reliable and faster turnaround for the industry.

However, the path to success is not as straightforward as it may seem. The CHIPS Act, passed in 2022, was a strategic move aimed at reducing America’s reliance on foreign semiconductor supplies, but its overall success has been met with some controversy. CHIPS’ stunted efficacy can likely be traced to turbulent market conditions and political uncertainty, but it’s important to recognize that tech initiatives often encounter a wide range of obstacles when it comes to successful implementation.

Infrastructure Challenges

While the push for US-based semiconductor manufacturing offers promising potential for strengthening the supply chain, several significant infrastructure challenges must be addressed. These obstacles, ranging from regulatory delays to sourcing critical chemicals and equipment, present significant challenges for a successful restructuring.

Manufacturing Capacity

The push for US chip production promises a stronger supply chain, but significant infrastructure challenges must be overcome. One issue is sheer manufacturing capacity – after decades of offshoring, the US lacks sufficient fabs and specialized suppliers. Building leading-edge fabs domestically is complex and costly, and projects in the U.S. have faced regulatory and logistical hurdles. Taiwan’s TSMC, for example, found that constructing its new Arizona fab has “taken at least twice as long as in Taiwan” due to complex permitting and regulations. TSMC’s CEO, C.C., Wei noted, “Every step requires a permit, and after the permit is approved, it takes at least twice as long [here].”

Skilled Labor Shortages

Another major challenge is the skilled workforce needed to build and operate semiconductor facilities. The U.S. faces a shortage of technicians, engineers, and construction workers experienced in fab projects. TSMC even had to import skilled workers to meet construction needs in Arizona, adding cost and complexity. Intel’s Pat Gelsinger has similarly emphasized workforce development, saying new fabs require “a class of workers that are going to be able to create the most efficient factories with the highest automation, metrology, tool efficiency, etc.”

Supply Chain

Advanced chip manufacturing depends on a network of materials and equipment suppliers, many of which are currently concentrated in Asia. U.S. fabs will need local sources for specialty chemicals, gases, silicon wafers, and semiconductor equipment. Today, gaps in this ecosystem force workarounds – for instance, TSMC had to ship critical chemicals like sulfuric acid from Taiwan to supply its U.S. fab, since local supply was lacking (U.S. chemical costs were “five times” higher than in Taiwan).

Domestic Testing Facilities

Packaging and testing facilities are another weak link: after chips are made, they often still need to be sent overseas for packaging if domestic capacity isn’t built. All these infrastructure elements (from water and power for fabs to ancillary suppliers) must scale up alongside the fabs. The US is racing to rebuild an entire semiconductor ecosystem virtually from scratch – a process industry analysts note will require addressing everything from talent pipelines to basic materials supply. For electronics distributors and engineers, acknowledging these challenges is important for planning.

Seizing Opportunities in The US Tech Manufacturing Revitalization

Rebuilding the semiconductor ecosystem from scratch ignites development across multiple sectors, creating new opportunities for engineers, software developers, and suppliers. As the U.S. ramps up chip production, there is a pressing need for expanded infrastructure in areas like data centers, software, and equipment to support the new semiconductor supply chain.

Partnering with Trusted Industry Leaders

The revitalization of America’s semiconductor infrastructure has wide-reaching opportunities across a diverse range of industries from packaging to software and beyond. It’s important that developers partner with a comprehensive semiconductor distributor as the landscape evolves.

Braemac Americas|Symmetry Electronics offers unparalleled value-added services that deliver the necessary support to navigate the complex transitions of reshaping a supply chain, offering everything from access to cutting-edge technologies to streamlined logistics and technical expertise. By partnering with a distributor who understands these complexities, developers can ensure smoother operations and mitigate challenges in an increasingly dynamic and competitive market.

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