Semiconductor Equipment

American Foundries Act will help semiconductor manufacturing remain competitive

02 July 2020

The move to bolster U.S. semiconductor manufacturing got a huge lift when the Senate announced it would put forth the American Foundries Act of 2020.

The legislation would see federal investments totaling tens of billions of dollars to boost semiconductor manufacturing and research to help the U.S. remain competitive in the global supply chain for chipmaking. The senators said the move to secure American semiconductor manufacturing is a matter of the country’s economy and national security.

“U.S. companies have led the world in semiconductor technology for decades, but over the years governments of overseas competitors have offered aggressive incentives for advanced chip manufacturing to relocate,” said Keith Jackson, president and CEO and director of ON Semiconductor and 2020 Semiconductor Industry Association (SIA) chair. “To reverse that trend and keep America in front in chip technology, we need to invest ambitiously in domestic semiconductor manufacturing and research. We commend the bipartisan group of bill sponsors for their leadership in addressing this challenge and urge Congress to move forward with legislation to incentivize semiconductor manufacturing and expand semiconductor research.”

The SIA said that while the U.S. has a stable chip manufacturing footprint and there are semiconductor manufacturing fabs in 18 states, other countries have put manufacturing incentives in place and the U.S. semiconductor manufacturing growth lags behind these countries due largely to a lack of federal incentives.

Under the American Foundries Act, federal investments would include $15 billion in federal grants to incentivize new domestic semiconductor manufacturing and R&D facilities. Additionally, $5 billion would be authorized for public-private collaboration for the construction or modernization of fabs for national security, intelligence and critical infrastructure.

“The U.S. simply cannot afford to cede more ground to competing countries in the production of semiconductor technology, which is the bedrock of our country’s digital economy and defense systems,” said John Neuffer, president and CEO of the SIA.

Moves are already underway to bolster U.S. semiconductor manufacturing with Taiwan Semiconductor Manufacturing Corp. (TSMC) planning to build a new 5 nm fab in Arizona that once finalized will be able to produce 20,000 wafers per month. Intel revealed recently it was also working with SIA and the U.S. government to explore how to continue U.S. semiconductor leadership through domestic sources for microelectronics and related technology. This might include building a new facility in the U.S. or working jointly with other manufacturers for new fabs.

A recent survey from the University of Birmingham found that the outbreak of the COVID-19 pandemic has demonstrated that global manufacturing must switch from large production sites in a single or a few locations to numerous smaller facilities worldwide to reduce business risk.

This opinion is shared by other experts that feel COVID-19 has revealed flaws in the current supply chain and the industry must de-centralize semiconductor manufacturing into more regions to prevent another crisis from impacting the overall global supply chain.

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