Friday, 18 September 2020 06:28

US will need to invest up to US$50b to increase share in chip manufacture: study

US will need to invest up to US$50b to increase share in chip manufacture: study Image by Shafin Al Asad Protic from Pixabay

The US will need to invest between US$20 billion (A$27.3 billion) and US$50 billion in new semiconductor fabrication plants if it wants to reverse the trend of the last 30 years which has seen semiconductor manufacturing decline, a study claims.

Compiled by the Boston Consulting Group and the US lobby group, Semiconductor Industry Association, the study pointed out that America's share of semiconductor manufacturing capacity had dropped from 37% in 1990 to 12%.

Additionally, only 6% of new capacity in development would be located in the US, while about 40% would be located in China.

The study, by BCG's Antonio Varas and Raj Varadarajan, and the SIA's Jimmy Goodrich and Falan Yinug, comes in the wake of conditions imposed by the Commerce Department last month to prevent Chinese telecommunications equipment vendor Huawei Technologies from obtaining semiconductors for manufacturing its products.

Following that, there was a report about China preparing to announce next month that it would spend US$1.4 trillion to become self-sufficient in semiconductor production by 2025.

The SIA criticised the August restrictions, saying it was "surprised and concerned by the administration’s sudden shift from its prior support of a more narrow approach intended to achieve stated national security goals while limiting harm to US companies."

And it added: "We reiterate our view that sales of non-sensitive, commercial products to China drive semiconductor research and innovation here in the US, which is critical to America’s economic strength and national security.”

In the study, issued on 16 September, the BCG and SIA said the trend of decreasing chip manufacturing in the US could influence the country's progress in making the materials needed for the next generation of semiconductors.

Currently, the latest semiconductors can only be made by Samsung Electronics (South Korea) and Taiwan Semiconductor Manufacturing Company. Intel, the largest supplier, announced earlier this year that it would be unable to produce 7nm chips for at least another year.

The study pointed out that the total cost of ownership of a fabrication facility, spread over 10 years, was about 30% higher for the US compared to Taiwan, South Korea or Singapore, and 37% to 50% higher than China.

This was "an enormous gap, considering that the 10-year cost of a state-of-the-art fab, including both initial investment and annual operating costs, ranges between US$10 billion and US$40 billion depending on the type of product," the study said, adding that anything between 40% and 70% of that cost came from government incentives.

Varas, Varadarajan, Goodrich and Yinug said global manufacturing capacity was forecast to rise by more than 50% between now and 2030, meaning there was a chance for the US to attract a new share of future fabs.

"According to our analysis, a US$20 billion to US$50 billion Federal Government program of additional grants and tax incentives for new state-of-the-art fabs built in the next decade would be effective in reversing the last 30 years' declining trend in US semiconductor manufacturing," they wrote.

Depending on the size of the investment, it would be possible for America to double or triple its role in the new additional manufacturing capacity that needed to be developed to meet anticipated market demand, and increase its share to a share ranging from 14% to 24% as opposed to 6% which was what it would have if investment stayed at existing levels.

Subscribe to ITWIRE UPDATE Newsletter here

Now’s the Time for 400G Migration

The optical fibre community is anxiously awaiting the benefits that 400G capacity per wavelength will bring to existing and future fibre optic networks.

Nearly every business wants to leverage the latest in digital offerings to remain competitive in their respective markets and to provide support for fast and ever-increasing demands for data capacity. 400G is the answer.

Initial challenges are associated with supporting such project and upgrades to fulfil the promise of higher-capacity transport.

The foundation of optical networking infrastructure includes coherent optical transceivers and digital signal processing (DSP), mux/demux, ROADM, and optical amplifiers, all of which must be able to support 400G capacity.

With today’s proprietary power-hungry and high cost transceivers and DSP, how is migration to 400G networks going to be a viable option?

PacketLight's next-generation standardised solutions may be the answer. Click below to read the full article.


WEBINAR PROMOTION ON ITWIRE: It's all about webinars

These days our customers Advertising & Marketing campaigns are mainly focussed on webinars.

If you wish to promote a Webinar we recommend at least a 2 week campaign prior to your event.

The iTWire campaign will include extensive adverts on our News Site and prominent Newsletter promotion and Promotional News & Editorial.

This coupled with the new capabilities 5G brings opens up huge opportunities for both network operators and enterprise organisations.

We have a Webinar Business Booster Pack and other supportive programs.

We look forward to discussing your campaign goals with you.


Sam Varghese

website statistics

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

Share News tips for the iTWire Journalists? Your tip will be anonymous




Guest Opinion

Guest Interviews

Guest Reviews

Guest Research

Guest Research & Case Studies

Channel News