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Growth and Equity for a Changing World
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A $350 Billion U.S. Chip Manufacturing Boom

by Elizabeth MacBride
January 6, 2023
in Ecosystem
Reading Time: 6 mins read
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The $350 billion chip manufacturing boom in the U.S.

As I journalist, I’ve learned to ask myself: What are the dynamics on the ground now that could result in change five years from now? These are the trends I’m watching this year, that I believe will shape events over the next five.

From Chips to Wafers, All Made in America

The global chip manufacturing industry is projected to be $1 trillion a year by 2030. Last year, from late 2021 through the end of 2022, companies in the United States made moves to capture a big chunk of that future market. Currently, the U.S. imports most of its chips from Asia, primarily Taiwan.

Twenty-four new chip manufacturing factories or semiconductor fabrication plants, known as “fabs” have been announced, from Upstate New York down to Texas. If these chip manufacturing factories and fabs come to fruition over the next 20 years as planned, the investment in these small cities will total more than $350 billion.

This year I’ll be watching for more new chip manufacturing and fab announcements, the surrounding economic growth and the environmental concerns arising from the fabs.

Arizona
Intel announced a $20 billion investment in two factories that will create 3,000 jobs, both in Chandler, outside Phoenix. State officials called it the largest private investment in state history. The projected new fabs add to Intel’s four already present in Arizona.

New York
Micron is building a $20 billion plant in Clay, near Syracuse, in Upstate New York. The company said it could invest as much as $100 billion over the next 20 years in the location as it builds this and other fabs. The site is slated to have 3,000 employees to start.

Idaho
Micron also announced a $15 billion memory manufacturing fab in Boise, near its headquarters. The company said the fab will create 2,000 jobs and the $15 billion will be spent over the next decade.

Indiana
Minnesota-based SkyWater Technology is building a $1.8 billion semiconductor factory and research facility in Indiana. It will be located next to Purdue University in West Lafayette and create 750 jobs.

North Carolina
In September 2022, Wolfspeed Inc., headquartered in Durham, announced it would build a $5 billion materials manufacturing facility to produce silicon carbide wafers for semiconductor chips. The facility will be in Chatham County, considered part (or just southwest) of the Research Triangle of Raleigh, Durham and Chapel Hill. The money will be spent over the next decade.

Ohio
Intel broke ground on two semiconductor chip factories in September 2022. Located in New Albany, just outside Columbus, this is slated to be a $20 billion project.

Texas
The Taiwanese company GlobalWafers plans to build a plant in Sherman, Texas. According to Gov. Greg Abbot, it’s a $5 billion project. GlobalWafers says the factory will produce 300-mm silicon wafers as early as 2025 and create 1,500 jobs.

South Korea-based Samsung has announced plans to build 11 plants in Texas, reportedly nearly a $200 billion investment. Work has already started on a $17 billion factory in Taylor, outside Austin. Plans call for a total of nine Taylor plants and two plants in Austin.

Texas Instruments is planning six new wafer fabs, including one in Richardson, which broke ground in May, 2022. The investment for four more factories located in Sherman, near Dallas, is reportedly $30 billion, with 3,000 jobs expected.

Reshoring Manufacturing: More Questions Than Answers

That leads to the next trend. Some chip manufacturing companies are migrating facilities to the U.S., as are other advanced manufacturing sectors, including at this biomanufacturing facility outside Pittsburgh. We’re also likely to see more American manufacturing of other future-leaning industries, including clean energy.

What about reshoring manufacturing of everyday items, from clothes to furniture to toys? The decisions about whether to make those in the United States or abroad lands on the desks of small and medium-company CEOs. Prices are fluctuating due to inflation, shipping costs and the rising geopolitical tensions between the U.S., China and Russia. The global recession that is affecting other countries more than the United States will likely lower labor costs, while labor costs will remain relatively high in the United States. How these factors play out in different industries will become more apparent in 2023.

Movement To Regulate Software

We’re beginning to see the whispers of a movement to regulate software. Questions about privacy and safety are starting to arise with more frequency as software becomes ever more integrated with the physical world, from airlines to cars. The number of software hacks and attacks is increasing. The costs of antiquated software, meanwhile, range from the serious — flight cancellations – to the incredibly irritating. Consider the hours everybody spends pressing buttons to break through automated customer service centers to get an answer or a human being.

As of today, software out of the box is primarily a “buyer beware” industry. Other models, like software-as-service, mean software makers routinely update software, but still take little responsibility for whether the software is secure.

Should big companies like Microsoft or Salesforce, be responsible when a hacker breaks into a system and steals data, or does the responsibility lay on the shoulders of those who purchased the software? Southwest Airline cancelled 16,700 flights over the 2022 holiday season, a meltdown that’s been blamed on the company’s decisions to push off updated its scheduling software and processes. In this case, the company, not the software maker, is clearly responsible, but ought should there be government oversight of whether software is functioning, as there is of planes’ safety?

When the software industry was born out U.S. government investments in science during the mid-20th century Space Race, no one predicted how integral it would become to day-to-day lives; administrations from Reagan’s to Clinton’s to Biden’s have mostly taken a hands-off approach to regulating software. This year, there will be more questions about whether those are the right decisions.

You Might Not Want To Be A Hospital CEO This Year

There’s another whisper that’s growing into a roar. The pandemic laid bare the lack of capacity in the U.S. health care system, especially when disaster strikes. For the first time in my memory as a business reporter, mainstream media outlets like The New York Times, which recently published a video op-ed about the shortage of pediatric ICUs, have been asking tough questions. The U.S. health care system has shifted to a primarily for-profit model over the past 30 years as many small hospitals were taken over by private equity firms and public companies, raising questions about whether the system can still deliver high-quality health care outside a few stellar, urban research centers. Media coverage in ProPublica followed public hearings held jointly by the FTC and the Department of Justice into the effects of the buyouts and mergers on U.S. health care. I don’t think there’s a taste in Washington, D.C., to take on health care reform, but more states may wade in, and there may be a trend to shift health care governance to local boards.

The Rise of Female Founders

Research is showing exactly what dynamics are at play that keep women from emerging into leadership positions. For instance, Shubha Chakravarthy, founder of Chicago-based Achiiv, which helps women build investable ventures, recently pointed me to 2014 study called “Who’s the Boss,” which shows when founding teams consist of mixed genders, social norms and gender expectations – like the ancient expectation that men are in charge, rather than actual merit, will determine who “gets to be the boss.” She’s not the only woman leader I’ve encountered lately digging deep to figure out why all the nice talk about women rising doesn’t translate to measurable progress.

  • More women are starting innovation-led ventures. The Global Entrepreneurship Monitor recently reported that women run one in three high-growth ventures, despite a lack of access to capital.
  • There is more capital in the hands of women investors. Even though women remain a minority in the early-stage venture space, they are a growing minority. 140 women-led venture firms launched in the four years preceding 2021, according to this article from the University of Chicago Booth School of Business. They were investing small amounts, which don’t show up in the data.
  • Increasingly, people in leadership roles provide training based in sociological research to both men and women that levels the playing field.

All these trends are continuing; one of these years will become the breakout year for women leaders and innovators.

A Less Cohesive Country

An immigrant friend of mine told me recently that while on a vacation abroad, she was with a group of Americans who were asked where they were from. Rather than saying, “the United States,” or “America” most identified themselves as from a city or state: San Francisco, say, or Texas. On many scales, the United States is becoming less cohesive. The country is pulling apart politically, legally, culturally and geographically, as climate change wreaks an increasing number of local disasters. What that trend means remains to be seen. I’ve written about the rise of secondary business capitals; there’s also state-level innovation and competition; and of course, a big challenge from another nation could pull the United States back together again.

 



This story and others on Times of E are made possible by a sponsorship from the Ewing Marion Kauffman Foundation. The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that provides access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity – regardless of race, gender, or geography. The Kansas City, Mo.-based foundation uses its grantmaking, research, programs, and initiatives to support the start and growth of new businesses, a more prepared workforce, and stronger communities. For more information, visit www.kauffman.org and connect with www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.

Tags: chipsmanufacturingmanufacturing in the U.S.microchipsReshoringwafers
Elizabeth MacBride

Elizabeth MacBride

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