U.S. To Ramp Up Semiconductor Production
The global chip shortage, another result of the ongoing COVID-19 pandemic, has caused disruptions in all things electronic. From self-driving cars to 5G network development to artificial intelligence, product shortages of semiconductor microchips are to blame. Out-of-stock electronics this holiday season are an issue that will hopefully not persist. Despite China’s discouragement, U.S. representatives are visiting Taiwan to discuss the microchip shortage, among other things. As one of the largest consumers but smallest producers of chips, the U.S. hopes to make a change moving forward.
Five U.S. representatives met with Taiwanese government officials on Thursday. When the news broke that the U.S. officials would
be flying out to Taiwan, the Chinese Embassy sent a blunt and aggressive message to Rep. Elissa Slotkin (D-MI), telling her to call off the trip. According to Slotkin, the statement included, “We strongly urge the Congresswoman to cancel the planned visit to Taiwan immediately, and not to support and embolden separatist forces of ‘Taiwan independence,’ lest it cause huge damage to the China-US relations and the peace and stability of Taiwan Traits.”
The bipartisan delegation went on the trip anyway to discuss various topics, but Representative Slotkin said supply chain issues and microchip production were on the agenda. The trip could strain U.S.-China relations, especially with this move signaling the United States recognizes Taiwan’s desire for independence from China.
Protecting National Security
Taiwan is home to the world’s largest contract chipmaker, the Taiwan Semiconductor Manufacturing Company (TSMC). Any disruption caused by China’s squashing of desired Taiwanese independence could be detrimental to production.
Many experts are concerned that the self-ruled democracy is directly linked to U.S. supply chain security. If China takes complete control over Taiwan and its production of microchips, U.S. national security would be at stake. In that case, China would be manufacturing microchips that could end up in every home in America.
The State Department also shared that they have asked the world’s top chipmakers to share supply chain information to address the global shortage. The United States aims to develop domestic production. The U.S. used to produce 37% of the world’s semiconductors, but now it is only responsible for 12%. However, in conjunction with innovative corporations here in the U.S., Congress is hoping to reverse that.
Samsung Takes The Lead At Home
Samsung Electronics announced this week they are building a $17 billion semiconductor factory in Taylor, Texas. Although it won’t produce until the second half of 2024, it will help address the low and declining domestic production. Processors for data centers, 5G networks, smartphones, artificial intelligence platforms, and high-performance computing will be manufactured at the plant. The facility will produce chips not only for Samsung products but for other customers as well.
Following Samsung’s announcement, Secretary of Commerce Gina Raimondo shared a statement reiterating that domestic production of semiconductor microchips “is critical for our national and economic security.” The lack of microchips has been damaging to the economy over the last few years, and the demand will continue to rise. TSMC is also building a $12 billion facility in Arizona and two other $20 billion Intel manufacturing plants.
Samsung received a $27 million grant from Texas to build the manufacturing plant, which will create at least 2,000 jobs. Significant tax incentives and breaks are expected for the facility. The city of Taylor initially offered Samsung a property tax break of over 90% for the first ten years. Samsung could also receive $3 billion in incentives, according to Texas Senator John Cornyn. Potentially bringing the biggest opportunity for corporations is the CHIPS Act.
The CHIPS Act, should it pass, could gift Samsung billions in incentives. The “CHIPS for America Act” aims to “restore American leadership in semiconductor manufacturing by increasing Federal incentives to enable advanced research and development, secure the supply chain, and ensure long-term national security and economic competitiveness.”
The House has yet to act on CHIPS, but it was approved in principle as part of the 2021 National Defense Authorization Act. Some version is expected to pass, but its level of funding, contents, and timing are all still in question.
Cross-posted from Liberty Nation News
Notes from the Editor
When looking back at the Covid epidemic, the lack of some high tech products around the world (go to a car lot, with no computer chips, manufactures are unable to make new cars), while the global supply chain has resulted in cheaper products, we have also put our trust in procuring material from governments that are not friendly to the U.S.
If for no other reason than for the sake of national security, we need to bring a baseline of what we need to support this nation in an emergency condition as we see now.
There is also the material needed for high-tech products; unfortunately, this is mainly controlled by China (it is too expensive to extract from the ground and remain competitive in the U.S.
China still controls the vast majority of all rare earth production. For some essential medium and heavy rare earth elements such as dysprosium and terbium, which are necessary to produce permanent magnets in electric vehicles and wind turbines, China’s control is virtually complete, with more than 98 percent of the global supply.
While I am not a huge fan of government subsidies to essential businesses, we need to look at this or the subsequent crises that come. We could find China or some other unfriendly nation able to cut off essential material for our own national needs.
The government would be wise to set up some entity to oversee this, put the needed money in, so come a plague, or something worse, like a war, we don’t find our access to these much-needed items out of reach.
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