Chips (semiconductor) chips, I dream of you
“Chips chips da ti du di du … I dream of you …” skats Italian jazz musician Paolo Conte in his 1981 masterpiece Via con me. This is the manufacturing community’s refrain as international borders threaten to harden into chokepoints for semiconductor-related commerce.
In fact, the chip industry is widely considered the hardest hit by the supply-chain issues of the COVID-19 pandemic and its container ships waiting weeks for cargo unloading; purchase- quantity limits; and backordered parts and subcomponents. But every modern vehicle, industrial component, smart device, consumer gadget, and appliance is peppered over with semiconductors imparting the processing power of electronic products most valued today.
The issue laid bare by COVID is how the cosmopolitan yet non-diversified nature of the semiconductor industry currently renders it vulnerable to disparate global issues. In many cases, a small handful of companies execute chip processing in Europe; chip-processing machine building in California and Japan; chip testing in Southeast Asia; and assembly into the final product (where applicable) in China.
Of most concern now is how more than half of all semiconductors and more than 90% of all advanced semiconductors are made in Taiwan. Fabrication plants there supply more than half of all the world’s semiconductors and nearly all advanced semiconductor chips having extremely miniaturized features. However, the looming possibility of China’s claim of Taiwan as a province could threaten this industry.
Heightening these tensions include Trump-era sanctions restricting Chinese telecommunications and electronics giant Huawei from employing U.S. software or technology and Biden-era sanctions as well as the 2022 Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act. The latter designates $280B for coordinated spending over the next decade on U.S. including semiconductor R&D and commercialization ($200B); manufacturing and workforce development ($52.7B); and chip production tax credits ($24B).
For the 2023 edition of the Design World Trends issue, many industry experts we surveyed indicated cautious optimism about this CHIPS program … although there’s almost universal concern about the many years it will take to develop and expand the industry. It’s still delightfully bullish. Many times over the years, I’ve heard industry-savvy folks at tradeshows and various other industry events declare the U.S. semiconductor industry effectively dead and beyond revival. Perhaps (as Miracle Max from Princess Bride might say) it’s been only mostly dead.
In fact, the U.S. CHIPS act is similar to the CHIPS Act officially adopted by the European Council of the European Union in December 2022. Beyond the supply-chain arrangements these acts will prompt, it will be interesting to see what new chip technologies they yield.
— Lisa Eitel • @DW_LisaEitel
Filed Under: DIGITAL ISSUES