29 May 2024 -
 General

US front running in race for chip fab dominance as global production surges

The global semiconductor manufacturing landscape is on the cusp of a major transformation, with the United States poised to dramatically increase its chip production capacity in the coming years. According to a report by the Semiconductor Industry Association (SIA), the US is projected to triple its chip manufacturing capabilities by 2032, a move aimed at reducing the nation’s reliance on East Asian production.

This significant expansion would see the US share of global semiconductor manufacturing rise from its current 10% to an ambitious 14%. While this marks a reversal of the decades-long trend of chip production shifting towards Asia, it’s not without its challenges.

The SIA report highlights that without government funding programmes like the CHIPS and Science Act, the US share would have dwindled to a mere 8%. This underscores the importance of continued government support in fostering a thriving domestic semiconductor industry.

John Neuffer, SIA CEO, acknowledged the significance of the Chip Act but emphasised the need for further action: “We have always said that the Chip Act is a strong first step, but we need to take more steps to achieve this goal. Our industry fully recognises that manufacturing is overly concentrated in East Asia.”

The SIA’s projections suggest a potential shift in the global balance of power in chip manufacturing. By 2032, the US is predicted to produce 28% of advanced logic chips, a significant increase from its current share. However, Taiwan is still expected to retain a leading position with 47%, followed by South Korea with 9%, and mainland China with 3%.

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, is playing a pivotal role in this global expansion. The company is building seven new plants in 2024, including three wafer plants and two packaging factories in Taiwan, and two wafer plants overseas. TSMC’s production capacity for its 3-nanometer process is expected to triple this year, reflecting the robust demand for advanced chips.

While the US is making significant strides, it’s not alone in this race for chip manufacturing supremacy. Mainland China is reportedly building around 30 new facilities for the chip supply chain, surpassing the 26 planned in the United States. The EU also has eight such projects underway.

This global surge in chip manufacturing capacity reflects the increasing importance of semiconductors in various industries, from consumer electronics and automotive to healthcare and defence. The race to secure a larger slice of this critical market is intensifying, with countries worldwide recognising the strategic and economic importance of having a robust domestic semiconductor industry.

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