The U.S. Congress has CHIPS and scientific conduct (opens in new tab)Worth $280 billion, the package includes $52 billion in subsidies to lure companies to manufacture semiconductors in the United States. He also includes a massive $200 billion in research in cutting-edge scientific fields such as quantum computing, AI and robotics.
The bill passed the Senate with bipartisan support by a vote of 64 to 33 and was approved by the House by a vote of 243 to 187. Its ultimate goal is to restore America’s technological leadership, not just for commercial reasons, but for broader reasons. Strategic reasons including reducing reliance on manufacturing in Asia.
Arguably, advanced chip manufacturing technology is an arms race. The US maintains an edge over China when it comes to chip-making technology, and this bill aims to maintain that. Military applications will become a top priority for the US government. Missiles, drones, signal intelligence, communications, etc. all rely on advanced chip manufacturing techniques, and countries clearly want to keep their technology secrets in-house.
Two US-based companies include Intel and Micron. (opens in new tab)Micron previously announced plans (opens in new tab) Invest $150 billion in US-based research, development and manufacturing. We are lobbying Congress to pass legislation so we can move forward with that plan.
This money injection will be an opportunity for Intel.Last week, the company reported a 17% year-over-year revenue decline. (opens in new tab), with rare losses. Part of that is due to the wider recession and excess inventories, but it’s also spending a lot. Intel’s capital expenditures were aimed at expanding production capacity, including plans to build his two new factories in Ohio. (opens in new tab)No doubt it aims to use some of that $52 billion to accelerate its plans.
What does this mean for us? In the short term, not many. It takes years from planning to groundbreaking, tools, production, and finally the products on the shelves. We all know that supply issues have created outrageous GPU prices and consoles are still hard to buy. (opens in new tab)These underlying problems will remain in the short to medium term.
In the coming years, more diversified manufacturing with more capacity should alleviate these problems. Samsung and his TSMC, among others, are also building new facilities around the world. Including US (opens in new tab)Could there be a real oversupply in the next few years?
Semiconductor supply problems are likely to persist, especially if relations between China and Taiwan deteriorate further. A shutdown of Taiwan’s manufacturing would be devastating for the global economy.There are worrying inflation issues and the chaos caused by the war in Ukraine (opens in new tab) that too.
The CHIPS Act won’t change the status quo overnight, but it is an important step on the way to a more diverse global semiconductor industry. TSMC may make some good chips but is in an untenable position strategically.Will the CHIPS law help reduce reliance on Asia-based manufacturing? Is it just a handout for ? Only time will tell.
