Computer chips are still "Made in USA"
For all the wishful thinking about manufacturing more laptops and iPhones in the U.S., there is one sector of tech manufacturing where America remains a leader: computer chips.
The bottom line: Some $44 billion worth of semiconductors are exported from the U.S. each year, making them America's fourth leading manufacturing export after cars, airplanes and refined oil. There are roughly 80 wafer fabrication plants (aka fabs) in the U.S., spread across 19 states.
"The industry was invented in the good old US of A, and to a large extent it's still here, unlike a lot of manufacturing."— John Neuffer, CEO, Semiconductor Industry Association
Driving the news:
- A startup called SkyWater Technology is hoping to tap into interest in domestic production. The company bought a Minnesota fab from Cypress Semi and recently landed a DARPA contract to make chips for the government, expanding on existing deals.
- Micron announced last week it plans to spend $3 billion to upgrade a plant in Manassas, Va., 40 miles west of Washington, D.C.
- Intel last year announced a $7 billion expansion of its facility in Chandler, Ariz., a move it said would eventually create 3,000 jobs. (Work on that factory began in 2011 but never finished.)
Also: An even greater share of the world's computer chips are designed domestically and made overseas by companies including Qualcomm, Apple, Broadcom and Nvidia. A bunch of the high-tech gear needed to produce chips is also designed and/or made in the U.S.
Yes, but: While U.S. chip production has steadily grown, its share of the market (now 13%) has declined as other countries, especially Taiwan and Korea, have rapidly ramped up production. Plus, many of the most advanced facilities capable of producing the smallest transistors are now outside the U.S.
Investment needed: The biggest issue is that other countries are investing more to nurture their chip business, including funding basic research, Neuffer notes.
Other challenges: Another concern is the pure increase in number of fabs globally over the past 18 months, he says.
"We’ve seen non-market driven overcapacity in the past. We know what it looks like and that gives us some cause for concern."
Finally, Neuffer adds that the Trump administration's trade war isn't helping matters:
"The application of tariffs just is counterproductive. It doesn’t make any sense at all."
Go deeper: America’s chipmakers go to war vs. China