When the CHIPS are up! – Rio Grande Guardian

The CHIPS and Science Act was passed about two years ago to support semiconductor manufacturing and innovation in the U.S. It provides funding to encourage private investment and has already led to about $450 billion (and growing) in new projects.

Texas Instruments (TI) was a recent recipient, with up to $1.6 billion in direct funding to support three 300mm wafer fabs under construction in Texas (near Sherman) and Utah, and another $6 billion to $8 billion in qualified manufacturing investment tax credits in the U.S. Samsung’s manufacturing facility in Taylor, Texas, received $6.4 billion. It is important to note that TI and Samsung’s investment in these facilities is a multiple of the federal funding inflow, and the new facilities will create thousands of jobs. More importantly, they will help secure the future of U.S. economic growth, security, and, most importantly, sustainability.

The primary goal of the CHIPS Act is to develop a geopolitically reliable source of semiconductors. These chips are essential to a variety of industries, including automotive, data storage and wireless applications, consumer electronics, industrial, smartphones, wired communications, servers and computers (in other words, almost everything). Additionally, advanced chips are needed for AI technologies. They are also essential for national defense.

Although most commonly designed in the United States, the vast majority of chips are manufactured in Taiwan. In addition to potential conflict with China, Taiwan is prone to earthquakes and droughts that can affect production. The importance of reliable supplies became abundantly clear during the pandemic, when supply disruptions brought many industries (including automotive manufacturing) to a virtual standstill.

The Texas CHIPS Act further encourages industry development in the state by establishing the Texas Semiconductor Innovation Consortium (TSIC) and the Texas Semiconductor Innovation Fund (TSIF). TSIC brings together experts from higher education, industry, and nonprofits to support increased innovation, research and development, investment, and workforce development (among other things). TSIF can be used to match funding to state entities (such as universities) for research, design, and manufacturing projects, and to businesses to encourage economic development related to semiconductor manufacturing and design.

While investments in reshoring make a significant difference, challenges remain. It will be difficult to replicate the potential for the semiconductor spectrum (which is becoming more unusual and advanced with each passing year), support the necessary supply networks, and provide assembly and testing after manufacturing. Mexico has capabilities in some areas, and exploiting these synergies will likely be essential to providing U.S. capabilities.

Like an adequate energy supply, chips are essential to the economy, national security, and our quality of life. Steps toward supply chain resilience amid geopolitical tensions are worth the investment. Stay safe!

Editor’s Note: The above guest column was written by Dr. M. Ray Perryman, president and CEO of The Perryman Group (www.perrymangroup.com). The Perryman Group has served more than 3,000 clients over the past four decades. The above column appears in The Rio Grande Guardian International News Service with permission from the author. Perryman can be reached by e-mail at [email protected].