US semiconductor industry to triple chipmaking capacity by 2032

The US semiconductor industry is poised for a significant expansion, with projections indicating that domestic chipmaking capacity will triple by 2032. This growth is largely fueled by the CHIPS Act, which has incentivized major chipmakers such as Intel, Taiwan Semiconductor Manufacturing Company (TSMC), and Samsung to expand their operations within the United States. According to the Semiconductor Industry Association (SIA), this strategic expansion will increase the US share of global semiconductor manufacturing from the current 10% to 14%.

John Neuffer, CEO and President of SIA, discussed the transformative impact of the CHIPS Act in a recent interview with Yahoo Finance. Neuffer emphasized that without this legislative support, the US was on track to see its global manufacturing footprint shrink to a mere 8%. “With the CHIPS Act, we are not only reversing this decline but also projecting that the US will manufacture 28% of the world’s chips by 2032,” Neuffer said, underscoring the fundamental shift in the semiconductor landscape.

The CHIPS Act, passed in 2022, allocates $39 billion in grants, supplemented by $75 billion in loans and loan guarantees, along with 25% tax credits to stimulate domestic semiconductor production. This legislative push has secured commitments from all top five global chipmakers, marking a significant achievement in US industrial policy aimed at reducing reliance on East Asian semiconductor supply chains.

This shift towards greater domestic production is not just about increasing US competitiveness in the tech sector. According to Neuffer, it is also about ensuring resilience against potential disruptions, like those experienced during the pandemic, which highlighted the vulnerabilities of over-concentrated supply chains. The US aims to produce one-fifth of the world’s advanced logic chips by the end of the decade, a goal that Commerce Secretary Gina Raimondo states is well within reach given the current trajectory.

However, the global competition is intensifying, with China and the European Union also ramping up their semiconductor capabilities. China, in particular, is constructing about 30 new facilities that are part of the chip supply chain, slightly more than the US’s 26 planned projects. This expansion is part of China’s strategy to create an overcapacity in chips that could drive several market cycles, potentially impacting American manufacturers.

Despite the competitive pressure, the SIA remains optimistic about the future of the US semiconductor industry. “We’ve always said that the Chips Act was a strong first step, but we’re going to need more to get to the promised land,” Neuffer stated, highlighting the need for continued governmental support to fully realize the industry’s potential. Business Times