Page 8 - Chip Scale Review_November December_2022-digital

EXECUTIVE VIEWPOINT

Cooperation is key to success of the CHIPS

and Science Act

By Asif R. Chowdhury [UTAC Group]

T here has been a lot of talk while advanced design is concentrated wheels are now being set in motion across

and discussion regarding the
recent CHIPS and Science mainly in the U.S. Free-market advocates geographic regions that will likely have a
significant impact on the semiconductor
are keen to point out that this kind of
Act. Passed by the U.S. Congress in national subsidy will disrupt the free manufacturing landscape by the end of
an unusual show of bipartisan support, market, thereby resulting in an increase the decade.
the bill allocates US$52.7 billion in in manufacturing costs and a waste of From the standpoint of recent supply
the form of subsidies to promote a resources, ultimately hurting consumers. chain disruptions, the trade war and the
domestic semiconductor eco-system Then there is a third viewpoint that geopolitical risks, the first argument
and achieve a higher level of national argues that this whole effort is nothing about achieving some level of sovereign
independence through increased domestic more than a geopolitically-motivated, semiconductor independence perhaps
manufacturing of semiconductors. About futile effort to deter an increasing holds water. America still leads the
US$39 billion of the funds is earmarked manufacturing share of Asia, particularly world in semiconductor technology:
for semiconductor fabrication facilities, that of China. This side also adds that, in 2021, the U.S. held 54% of global
with US$2 billion specifically allocated despite the subsidy, the effort will likely semiconductor market share and 7 of the
for mature semiconductor products that not achieve its goal with decades of top 15 semiconductor companies were
are considered vital for national defense lack of attention and funding of the American. Over the past decade, the
and security—this also includes chips industry that led to the U.S. decline in its U.S. has spent almost twice as much in
used in the automotive sector. The manufacturing capability and capacity in research and development as the rest of
balance of the funds is targeted to foster the first place. the world combined. These statistical
increased research and development Each of the three perspectives has figures while spectacular, provide a
efforts and cultivate a talent pool some merits, especially when reviewed false sense of security. Indeed, the U.S.
essential for the sector. The bill does in isolation. But in today’s connected leads in semiconductor design and
come with some guardrails, i.e., imposing global ecosystem, it would be unwise market share, but it has fallen far behind
restrictions in establishing manufacturing to view any key semiconductor policy in the manufacturing sector. While
sites in certain geographic regions. decision in isolation. semiconductor devices and technology
were invented in America, only about
Three sides to the debate A global perspective 10% of the world’s supply comes from
The discussions and debates about the Today, the semiconductor industry the U.S. today—down from 37% in
CHIPS Act have evolved mostly around contributes to less than 0.5% of the global 1990. In comparison, China’s share
three primary views and arguments. The gross domestic product (GDP), but plays a has grown from 0% to 24% during the
patriotic argument is that such focus is critical role in most of the balance of the same period. Today, 75% of the global
essential for the United States to have 99.5% of the GDP. The significant supply chip supply are manufactured in Asia,
long-term sovereign independence of chain disruption caused by COVID-19 with 40% of that coming from Taiwan
critical semiconductor components, served as a wakeup call, not only for the alone. Taiwan accounts for 66% of the
economic growth and national security. U.S., but also for Europe and Japan. The global foundry market share with TSMC
After all, microchips are ubiquitous impact and importance of semiconductors commanding an impressive 56% of the
today, used in literally everything from in our daily lives and national interests share by the end of this year. Figure 1
toaster ovens to watches, to our every-day quickly became apparent, and the shows this historical trend clearly and
vacuum cleaners, to weapons systems. realization was further solidified by predicts the outcome by the end of the
A not her side a rg ues t hat such recent geopolitical instability. These decade—and it is not a pretty picture for
protectionist moves play against the concerns prompted these regions to the U.S., Europe and Japan. The design
free-market dynamics. The natural seriously contemplate a path towards capability in itself is not of much use if
flow of the evolution of semiconductor increasing self-reliance. Undoubtedly, the these products can’t be manufactured
manufacturing over the past decades has trade war between the U.S. and China with access to a steady stream of
followed the market path of optimum has become a valid concern for many supply to meet dema nd. M IT R E
labor and technology dominance – countries, even though many may not Engenuity, a non-profit organization
manufacturing primarily in lower cost necessarily openly show more support that manages federally-funded research
geographic regions (i.e., Asian nations), to one side than the other. Nevertheless, and development centers, defines the

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