Analyzing the Impact: The Global Semiconductor Shortage and the Shrinking U.S. Chip Manufacturing Capacity

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Analyzing the Impact The Global Semiconductor
Shortage and the Shrinking U.S. Chip
Manufacturing Capacity https//yieldwerx.com/
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The global semiconductor shortage has revealed
significant challenges in the manufacturing
capacity of computer chips within the United
States. President Joe Biden's executive order to
review critical product supply chains has shed
light on the alarming statistic that only 12 of
global semiconductor fabrication occurs
domestically, compared to 37 in 1990, as
reported by the Semiconductor data Industry
Association (SIA). This heavy reliance on foreign
fabrication raises concerns related to lower
capability, high global demand, and limited
investment, posing a threat to the semiconductor
manufacturing industry in the United
States. Declining Manufacturing Capacity The
Impact of Reliance on Foreign Fabrication One of
the key issues contributing to the decline in
U.S. chip manufacturing capability is the
increasing dependence on international partners
for chip fabrication. Despite U.S. companies
holding 47 of the global chip sales market, a
mere 12 of these chips are manufactured within
the country. The importance of chip design
innovation cannot be understated as the demand
for faster and more advanced electronics
continues to grow. To stay at the forefront of
technological advancements, access to the most
advanced fabrication technologies is crucial.
Currently, Taiwan and Samsung in South Korea are
developing 3-nanometer fabs, while the U.S. lacks
a 7-nanometer fab. Intel's 7-nanometer fab is
expected to commence production only in late 2022
or early 2023, leaving the U.S. without the means
to produce the most advanced chips. Meeting High
Global Demand Navigating the Effects of the
Semiconductor Shortage The high global demand for
electronics, particularly exacerbated by the
COVID-19 pandemic, has placed tremendous pressure
on chip fabs to ramp up production. During the
pandemic, automotive technology reduced
semiconductor chip orders, anticipating a
decrease in demand. However, as production
resumes, the industry now faces a shortage of
chips necessary for various vehicle systems, such
as safety, control, emissions, and driver
information systems. This shortage has led to
calls for wafer and semiconductor companies to
expand production or temporarily reallocate
existing production to cater to the demand for
auto-grade wafers. However, such reallocations
would inevitably result in shortages elsewhere
within the supply chain. Moreover, the
manufacturing process itself is time-consuming,
with long lead times and estimated production
durations of up to three months, further
exacerbating the challenges faced by the
semiconductor industry.
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Limited Federal Investment Addressing the
Funding Gap in U.S. Semiconductor
Manufacturing Limited federal investment is
another critical factor contributing to the
decline of the U.S. semiconductor manufacturing
sector. Countries like Taiwan, South Korea,
Singapore, and China have made significant
investments in their semiconductor industries,
encompassing not only the development of
state-of-the-art facilities but also substantial
funding for research and development (RD) and
tool development to support the next generation
of fabs. In stark contrast, the U.S. has lagged
in providing comparable incentives and
investments. Taiwanese semiconductor giant TSMC,
for example, has plans to invest billions of
dollars in fabs, including a 12 billion
investment in a fab in Arizona. However, the
anticipated monthly production capacity of the
Arizona fab is around 20,000 wafers,
significantly lower than the millions of wafers
produced in TSMC's existing facilities in Taiwan
and China. President Biden's Executive Order A
Promising Step Towards Industry
Revitalization President Biden's executive order
to review supply chains is a crucial step toward
identifying the necessary investments and actions
required to strengthen the U.S. semiconductor
industry and overcome the challenges it currently
faces. By conducting a comprehensive analysis of
supply chain vulnerabilities, the government can
gain valuable insights into the areas that
require immediate attention and support. This
includes identifying opportunities for increased
federal investment in semiconductor manufacturing
yield, incentivizing research, and development
initiatives, and fostering collaboration between
industry stakeholders and academic institutions
to drive innovation and technological
advancements.
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• Conclusion
• In conclusion, the global semiconductor shortage
  has underscored the need for strategic
  interventions within the U.S. semiconductor
  manufacturing industry. Addressing the issues of
  lower capability, high global demand, and limited
  investment is essential for the country to
  maintain its position as a leader in the
  electronics industry. Through coordinated efforts
  and effective policies, the U.S. can bolster its
  semiconductor manufacturing capacity, foster
  domestic innovation, and ensure a robust and
  resilient supply chain for critical products.
• References
• "Semiconductor Industry Association 2021 State
  of the Semiconductor Industry Report."
  Semiconductor Industry Association. 2021.
• "2020 Annual Report." Semiconductor Industry
  Association. 2020.
• Lohr, S. "Semiconductor Shortage What to Know."
  The New York Times. May 3, 2021.
• Henning, D. "Semiconductor shortage puts the
  brakes on auto sales." The Washington Post. June
  3, 2021.
• Harding, R. "Biden signs executive order to
  address chip shortage through supply chain
  review." Reuters. February 24, 2021.
• "2021 Key Business Issues." Semiconductor
  Industry Association.