The CHIPS Act stalemate threatens US IC manufacturing revival


The roadblocks in the way of Produce Semiconductors for America Act—commonly known as the CHIPS Act—have put America’s semiconductor revival in IC manufacturing in the doldrums. Intel has pulled the plug on the groundbreaking of its Ohio fab in response to the slow passage of the CHIPS Act, while its CEO Pat Gelsinger sent a clear message to the US Congress: “We need this done.”

And it’s not just Intel; Both Samsung and TSMC have committed to building semiconductor fabs in the United States. While the CHIPS Act is supposed to support US companies, the US-based industry organization SEMI has urged the government to open the $52 billion funding to all semiconductor companies investing in the United States.

Take the case of GlobalWafers, a supplier of silicon wafers from Taiwan, which plans to build a $5 billion manufacturing plant in Texas. GlobalWafers has hinted about pivoting to South Korea if the CHIPS Act is not passed.

It was a different scene altogether just a few months ago when a US semiconductor firm’s CEO called the technological rivalry with China a “Sputnik moment,” referring to Russia’s launch of the first satellite during the mid-1950s that triggered a protracted space technology race. There has been a broad and bipartisan agreement that domestic chip manufacturing is crucial for the United States to remain a semiconductor powerhouse.

However, in the midst of this legislation, issues reportedly emerged, ranging from immigration to federal funding for R&D, stalling the passage of the bill. The recent statement of Commerce Secretary Gina Raimondo about the US government not wanting to dip into the private sector supply chain and try to micromanage has further added to the doubts about the future of the CHIPS Act.

That stand, though consistent with the US government’s hands-off approach regarding the private sector, has rocked the prospects of reinvigorating one of the most capital-intensive businesses in the United States: IC manufacturing.

Now that electronic supply chains have just started to normalize after chronic chip shortages, this stalemate on the CHIPS Act seems to have posed the next “clear and present” danger. It jeopardizes Intel’s bid to catch up with mega fabs TSMC and Samsung on advanced process nodes and threatens to stall mega projects in the United States.

Amid what The Washington Post called the game of chickens in a recent story, for the $52 billion CHIPS Act, voices in the semiconductor industry are getting louder: Make up your mind and get it done.

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