Last summer, the Senate passed The Chips Act, which would invest $52 billion to help reshore computer chip manufacturing: the bill was never brought to a vote in the House. Funding for chip reshoring had been part of the Infrastructure Bill but was later dropped. Now nine governors have called upon the House to pass The Chips Act to get the ball rolling again.
Since the beginning of the year, the automobile industry has halted production at several plants due to a computer chip shortage. The shortage was brought on by COVID, which created production labor shortages and unprecedented demand for products that use chips. Back in the 1990s, America produced over a third of the world’s microchips; by 2020, it was 13%. Currently, 80% are made in Asia—and this concentration increases the risk of disruption from political, environmental, and natural events. The result has been a renewed focus on making chips in America, mostly in the Arizona desert, where low energy costs, a talented workforce, and a business-friendly environment appeal to manufacturers.
Reshoring chip manufacturing is not unique to the US—it is happening all over the world. Bill Hutcheson, CEO of VLSI Research, declared last year, “We live in the post-globalization era …All countries are beginning to wall-themselves off.” Co-locating production and consumption is indicative of regionalization, where countries are pulling back supply chains onto their own soil, or to that of neighboring countries. Neighbors are becoming more intertwined economically and politically. National security is just one of the drivers behind this trend.
In March 2020, Intel announced that it would invest $20B in two new manufacturing centers in Arizona. The US government has even lured a Taiwanese chip manufacturer, TMSC, to the Arizona desert, as if to say that it is more important to have the capability than the profits nearby. Considering China’s stated goal of reunifying with Taiwan, securing the technology on US soil makes a lot of sense.
Source:
Akhil Ramesh, “Arizona is Building Back Better by Reshoring Critical Technology,” The Hill, 21 June 2021.
Arjun Kharpal, “How Asia Came to Dominate Chipmaking and What the US Wants to Do About It,” CNBC, 11 April 2021.
Matt Leonard, “White House Supply Chain Report Outlines Reshoring Ambitions,” Supply Chain Dive, 9 June 2021.
George Leopold, “US Chips Act Takes Center Stage in Post-globalized Industry,” EET Asia, 14 August 2020.
Photo: Intel
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