By 2030, the U.S. could produce a fifth of the world’s leading-edge chips crucial for the next technological frontier and artificial intelligence, up from none today, Commerce Secretary Gina Raimondo said on Monday.
Such an achievement can be accomplished with the funding already approved in the Chips & Science Act, added Raimondo, who was speaking at an event hosted by the Center for Strategic and International Studies.
Raimondo said that’s a rosier outlook than a year ago and a result of the scope of more than 600 proposals the agency has gotten from companies seeking funding through the 2022 legislation aimed at remaking the U.S. chip industry.
The $39 billion Chips Act is at the cornerstone of what Raimondo describes as a new space race, with China investing aggressively in its domestic industry and the geopolitical backdrop raising concerns about the world relying so heavily on one company—
Taiwan Semiconductor Manufacturing
—for the advanced chips crucial to artificial intelligence, military weapons, and much of everyday life.
Though the U.S. leads in designing chips and developing large-language AI models, it doesn’t manufacture or package any leading-edge chips. “The brutal fact is that the U.S. can’t lead the world as a technology and innovation leader on such a shaky foundation,” Raimondo said.
Raimondo stressed that the plan wasn’t to build a couple of chip fabrication plants and be done but rather to create a “soup to nuts” supply chain onshore.
“I’m confident the U.S. can become home to the entire silicon supply chain for the production of these leading-edge chips, from polysilicon production to wafer manufacturing to fabrication to advanced packaging,” she said.
Since Biden signed the Chips Act, the private sector has announced $200 billion in semiconductor manufacturing investments. But lately, some companies have complained of slow distribution of incentives from the legislation, with
Intel
earlier this month delaying the production timeline for an Ohio factory, citing in part the funding from the Chips Act.
Raimondo noted tough talks with the industry, with only a minority of companies likely to get funding. The Commerce Department has targeted $28 billion of the program’s $39 billion in funding for incentives for leading-edge chip manufacturers. Raimondo said that leading-edge companies alone have requested more than $70 billion.
The priority, she said, is on projects that will be operational by 2030. The agency is focused on targeted investments in achieving national security objectives rather than sprinkling money around to a lot of companies.
While the level of funding in the Chips Act pales in comparison to the $30 billion Taiwan Semiconductor allocated to expanding its facilities or the $41 billion that China spent last year, Raimondo noted that the largest leading-edge chip customers—
Apple,
Nvidia,
Microsoft,
Google,
Amazon.com
—are American, as are designers like Nvidia and
Advanced Micro Devices.
That provides leverage so that the U.S. doesn’t have to go dollar for dollar with other countries, Raimondo said, while continuing to stress the urgency of reshaping the U.S. manufacturing base.
The agency is also bolstering investment in current-generation and mature node chips essential for cars, defense systems, medical devices and infrastructure. While the legislation requires at least $2 billion in investment in these foundational or legacy chips, Raimondo said she expects the agency to do multiples of that and has already invested $1.5 billion in
BAE Systems,
Microchip,
and Global Foundries, with more announcements to come.
Building the talent needed to manufacture these chips at home is also part of the initiative. Raimondo said the newly created National Semiconductor Technology Center would create a hub for research and training, set standards and best practices to unify the industry, and tackle one of the biggest issues—a shortage of PhD engineers, college grad engineers, and high school graduate technicians needed to bolster chip production in the U.S.
While Raimondo acknowledged the risk of picking potential winners and losers as the agency earmarks funding from the bill, she said the bigger risk was an overreliance on one part of the world for the most important piece of hardware in the 21st century.
“All AI, which is the defining technology of our generation, runs on chips. Imagine if we are dependent on a couple countries in Asia for our entire chip supply. These are the large-language models to train military equipment, nuclear simulation, satellites, bioterrorism,” she said. “You can’t lead the world as the U.S. if you don’t lead the world in this kind of technology and innovation, including manufacturing.”
Write to Reshma Kapadia at reshma.kapadia@barrons.com
Read the full article here
