Chip Manufacturers Embrace Production Beyond China, Including in the US

By Logan Wamsley

Semiconductors today now play a critical role in nearly every major industry in some form or another. And as supplier inventories have remained scarce, these industries ranging from automotive to healthcare to consumer electronics have felt the repercussions.

Not immune to these repercussions are the chipmakers themselves, who across the board are seeing significant losses in the stock market. AMD, for example, has seen an incredible 41% loss in valuation.

These struggles are, at least in part, prompting many chipmakers to take long-term actions to gradually expand their productions beyond the bottlenecks currently seen in China. Particular attention has been paid to U.S. production, which has been cited as a priority by the current administration. Indeed, one of of first executive order signed by President Biden in 2021 ordered a 100-day review of key products including semiconductors and advanced batteries used in electric vehicles, followed by a broader, long-term review of six sectors of the economy.

The chipmakers themselves have also taken action of their own. Intel has recently announced plans to build a $20 billion chip plant outside of Columbus, Ohio. According to Governor Mike DeWine, this is “monumental news for the state of Ohio” and will be “transformative for our state.” Once completed, the facility will encompass 1,000 acres and employ approximately 3,000 people.

Intel is not alone. In New York, for example, North Carolina-based chip manufacturer Wolfspeed opened what it claims is the largest plant in the world for silicon carbide chip manufacturing. TSMC, the largest chip manufacturer in the world, while somewhat critical of U.S. chip production despite a profitable Oregon plant, has also begun construction of a new chip plant in Kumamoto Prefecture, southwestern Japan, which would further expand U.S. customer buyer options.

According to analysts, while domestic chip production may currently be cost-prohibitive and difficult due to strict labor and ESG-related legislation, many agree that support for such measures may be the best solution forward not just to move away from China in the main, but to diversify the global supply chain and minimize the risk for future supply chains disruptions on the scale of what has been seen the last two years.