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Why the U.S. needs to win the computer chip cold war

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This week Samsung Electronics announced it is building a computer chip manufacturing and research cluster in central Texas.

The Taylor, Texas silicon chip center includes two factories that would make four- and two-nanometer chips. Also, there would be a factory dedicated to research and development, as well as a facility for the packaging that surrounds chip components.

The project is expected to generate at least 17,000 construction jobs and more than 4,500 manufacturing jobs according to Commerce Secretary Gina Raimondo.

The first factory would begin production in 2026, with the second starting in 2027.

The job giant coming to Taylor, northeast of Austin, wouldn’t have happened without the passage of the Biden administration’s 2022 CHIPS and Science Act. This allowed the agreement to provide up to $6.4 billion in direct funding to Samsung.

The deal, announced Monday by the Commerce Department, is part of a total investment in the cluster that, with private money, is expected to exceed $40 billion. The purpose of the CHIPS and Science Act was to revive the American production of advanced computer chips.

The funding also would expand an existing Samsung facility in Austin. The government has previously announced terms to support other chipmakers including Intel and Taiwan Semiconductor Manufacturing Co. in projects spread across the country.

The CHIPS and Science Act marked a turning point for the U.S. semiconductor industry. This act, spurred by a buildup of economic and security concerns, allocates $52.7 billion to incentivize domestic production of computer chips. The promise of the CHIPS Act was to solve the critical need for bringing advanced chip manufacturing to the United States, benefit the U.S. economy, strengthen national defense and reduce the nation’s reliance on chips made in China and Taiwan.

The vulnerability of the global chip supply chain became painfully evident during the COVID-19 pandemic. Disruptions in chip production, primarily concentrated in Asia, led to shortages that crippled major industries like auto manufacturing and consumer electronics. This highlighted America's dependence on foreign chipmakers, particularly Taiwan, which produces over 90% of the world's advanced chips.

Geopolitical tensions further amplified these concerns. The potential for conflict over Taiwan could disrupt chip supplies, posing a significant threat to the U.S. economy and national security. Additionally, concerns exist about potential vulnerabilities in the chip manufacturing process itself if heavily reliant on foreign sources.

The CHIPS Act aims to address these issues by reshoring chip manufacturing. Incentives like tax credits and subsidies are designed to make the U.S. a more attractive location for chip fabrication plants. This will not only diversify the supply chain and lessen dependence on foreign producers but also create high-paying jobs in the domestic tech sector.

A robust domestic chip industry strengthens the U.S. economy in several ways. It fosters innovation by keeping research and development closer to production facilities. Additionally, a secure and reliable supply chain reduces production bottlenecks and price fluctuations, ultimately benefiting consumers.

The national security implications are equally significant. Domestic chip production ensures a reliable supply for critical military technologies and infrastructure. It also reduces the risk of foreign manipulation or sabotage within the chip manufacturing process.

However, it's important to consider that the reshoring process will demand a long timeline. Building new fabs (fabrication plants) can take years. So, it will likely be near the end of the decade before there is a significant increase in US chip production capacity.

Also, there is fierce global competition in this hi-tech sector. China is also investing heavily in chip manufacturing and seeking to avoid foreign dependence on advanced chips and its sourced components.

The spending of tens of billions of dollars will not guarantee success. Innovation and breakthroughs are necessary for the United States to compete effectively and win what has become the computer chip cold war.


Zachary A. Collier is Assistant Professor in the Department of Management at Radford University. His research interests include Risk Analysis and Decision Analysis, which he applies to problems at the intersection of technological, organizational, and societal domains, with a special interest in the semiconductor supply chain. He currently serves as Co-Chair of the NDIA Electronics Division’s Trust and Assurance Committee. He is an active member of INFORMS, where he serves on the Advocacy Governance Committee. Dr. Collier is a Fellow of the Center for Risk Management of Engineering Systems at University of Virginia, a Visiting Scholar at the NSF Center for Hardware and Embedded Systems Security and Trust (CHEST), a member of the Society for Risk Analysis, and contributes as a subject matter expert to the development of industry standards through SAE International.

His prior work experience includes the U.S. Army Engineer Research and Development Center, where he was a member of the Risk and Decision Science Team. He is Managing Editor of the Springer journal “Environment Systems & Decisions” and is a member of the Editorial Board of “Risk Analysis”.

He earned his Ph.D. in Systems Engineering from University of Virginia, a Master of Engineering Management from Duke University, and a Bachelor of Science in Mechanical Engineering from Florida State University.

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*This interview will be recorded on Wednesday, April 17, 2024.

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David Martin Davies can be reached at dmdavies@tpr.org and on Twitter at @DavidMartinDavi