Yogi Berra once said, “If you don’t know where you’re going, you’ll end up somewhere else.”
In an industry as important as semiconductors, “somewhere else” won’t cut it. Semiconductors, or microchips, are the brains of modern electronics—and they’re central to America’s future economy and national security.
For the US to lead the world in semiconductor manufacturing and innovation, we need to know where we are going.
The CHIPS and Science Act, signed into US law in 2022, represents an important first step. The historic initiative appropriates $52 billion for semiconductor research and manufacturing programs while establishing a temporary tax credit specific to semiconductors.
To succeed, the CHIPS Act needs a roadmap, a plan to guide our actions now and for decades to come.
For that plan, see the National Semiconductor Economic Roadmap (NSER).
A national strategy, led by industry
NSER (pronounced “response”) is a 10-year industry-led plan for increasing the competitiveness of US semiconductor manufacturing and strengthening supply chain stability, charting a pathway for leaders in industry, government, and academia to strengthen the manufacturing ecosystem for a technology. Invented in the US.
NSER offers rigorous data and analysis, establishing clear goals and objectives in four areas: infrastructure, supply chain, workforce, and entrepreneurship. States including Arizona are pioneering new solutions to advance those four goals.
In November 2022, Arizona Office has partnered $100 million in funding to improve semiconductor infrastructure, workforce, and research capabilities, with a focus on accelerated development, commercialization, and manufacturing of next-generation semiconductor-based technologies in the US.
In addition, new programs such as Semiconductor Technician Quick Start manages many women and minorities in the industry. A partnership of Maricopa Community Colleges, Arizona Commerce Authority, and Intel, this two-week, 40-hour boot camp teaches fundamental skills and includes the opportunity to interview with Intel upon graduation.
Return to a semiconductor slide
In recent decades, the US has experienced a steady decline in semiconductor manufacturing as production capacity has moved overseas, with China and other Asian countries investing heavily in chip manufacturing and research and development. development (R&D). On its current path, the US share of microchip manufacturing could decline from 11% today to 8% by 2033—down from 40% 30 years ago.
Realizing the full value of the CHIPS Act and growing the entire manufacturing ecosystem will require policymakers, industry players, academia, and other stakeholders to work together in areas of precompetitive common interest.
If these stakeholders meet the NSER goals, the US will capture up to 30% of capital investment in the global semiconductor industry over the next 10 years, according to the Boston Consulting Group. That could increase the US share of global capacity to 17%, reversing a decades-long slide.
A transformation of this magnitude has many benefits for the stability of the US economy, driving the creation of thousands of high-wage jobs, enhancing our technological leadership, and strengthening the national US security.
So where do we start? NSER started with infrastructure.
Development of domestic infrastructure
Semiconductors represent one of the most capital intensive sectors of the US economy. Chip manufacturing requires physical sites, equipment, and transportation infrastructure in addition to an educated workforce and R&D facilities.
NSER’s long-term vision includes aligning the local regulatory and incentive environment in competitive markets to increase the attractiveness of the US, investing in shared R&D infrastructure to encourage collaboration, and developing infrastructure to promote sustainability.
Increasing supply chain resilience
The sheer complexity of the semiconductor supply chain puts the US at great risk of disruption to the flow of goods and services. These risks most acutely apply to materials, wafer fabrication, and packaging, assembly, and testing (PAT).
The East Asia region accounts for approximately 80% of all PAT capacity, 40% of which is in mainland China. The US supports less than 5% of global PAT capacity.
To improve US resilience, NSER prescribes additional activities on shore, near shore, and friend to shore. This effort should include establishing reliable sources of materials, tools, intermediate products, and equipment while increasing domestic semiconductor-manufacturing capacity.
But because full onshoring would be expensive and impractical, the roadmap also emphasizes maintaining US access to global markets and improving supply chain visibility.
Solving people’s problems
One of the biggest challenges in the semiconductor industry is building its workforce. In the US, the sector employs nearly 277,000 workers. To meet the future labor needs envisioned by NSER, that workforce will need to grow by hundreds of thousands of people over the next decade.
Attrition rates; declining interest among American students in science, technology, engineering, and mathematics; and irreversible barriers to immigration contribute to the barriers.
NSER proposes a robust set of actions to strengthen the talent pipeline by ensuring equitable and inclusive access to training, increasing retention of the skilled workforce and addressing the drivers of turnover -or attrition, and ensure that the workforce remains adaptable to the changing needs of the industry.
Entrepreneurs contribute to the semiconductor industry by improving production processes and methods, often resulting in incremental gains that stimulate US competitiveness and elevate the entire industry.
The challenges faced by entrepreneurs, however, are great, such as attracting funding and accessing the facilities, equipment, and materials needed by manufacturers to test products.
NSER recommends expanding private, government, and academic investment in entrepreneurs; improving access to facilities and knowledge; and develop a spirit of collaboration between research universities, startups, and industry players.
The CHIPS Act revitalized the US semiconductor industry for the 21st century. To capitalize on this momentum, the sector now needs to pay attention to the bigger picture and act quickly to improve the entire manufacturing landscape. NSER is the industry’s roadmap to success.