By Harvard Business Review
The United States is investing billions of dollars to bring the most advanced semiconductor manufacturing onshore. New factories are rising across the United States, and the new Taiwan Semiconductor Manufacturing Company (TSMC) chip fabrication facility (fab) in Arizona will make some of the most advanced chips in the world. Despite this progress, the United States still faces a major dependency on other countries for a key part of the value chain: the back-end factories that perform all the steps needed to turn processed silicon wafers into packaged chips.
Wafer testing, cutting the wafers into individual chips (known as “singulation”), packaging, and testing finished chips moved offshore in the 1970s because of its high labor intensity. Even companies like Intel that have made chips in the United States for a long time send most of them to Malaysia, Vietnam, or China for packaging.
The CHIPS & Science Act of 2022 offered a broad range of subsidies for companies—including Intel, TSMC, Samsung Semiconductor, Micron Technologies, and Texas Instruments—to build new fabs in the United States. While it also provided subsidies for some companies to build packaging plants—such as one that SK Hynix will build in Indiana and another that Amkor Technologies is constructing in Arizona—they have been the exception. There is nothing close to the level of activity needed to create the full semiconductor ecosystem in the United States.
Jordan Rose, Founder and President of Rose Law Group, tells RLGR: “adopting a buy American policy similar to what is done with the car industry is the most certain way of on shoring more industries critical to chip manufacturing.”
