If Donald Trump wins the 2024 presidential election, semiconductors may be the last thing on your mind.
Yet, the existing federal effort aimed at increasing tech manufacturing in the US may no longer just move slower than many hoped — it may stop altogether.
Recently, Trump took aim at the CHIPS and Science Act on the Joe Rogan podcast on Oct. 25, suggesting that instead of putting federal money toward a domestic semiconductor industry, the US can charge foreign semiconductor manufacturers high tariffs to encourage them to build factories in the United States.
“That chip deal is so bad,” the Republican candidate told Rogan.
One problem with this suggestion is that tariffs are paid by the importer and not the exporter. The idea, repeated by Trump, that a tariff is something the US charges foreign countries when goods are imported is disinformation. Tariffs are paid for by the business doing the importing, which often in turn increases the cost of the imported goods to the consumer.
Killing the CHIPS Act isn’t as simple as declaring it defunded, with millions of dollars already committed. But it can easily be mismanaged and abused to benefit corporations over workers. It’s a complex and in some ways risky act that requires competency to get right. As it is, there have been holdups due to the long negotiation processes meant to ensure that the federal money is not misused by the corporations that are awarded funds.
Still, people connected to the US semiconductor industry have expressed fear that a Trump presidency could mean the end of years of hard work to establish both foreign and domestic semiconductor fabrication plants and the jobs they bring to the United States.
Democratic nominee for president and current vice president Kamala Harris, in contrast to Trump, has been promoting the CHIPS Act, one of the major bipartisan pieces of legislation passed by the Biden Administration.
On Monday, Harris toured a Corning semiconductor plant in Saginaw, Michigan, that received $325 million in CHIPS funding to expand operations and add 3,000 jobs in the swing state.
Why US semiconductor manufacturing matters
The CHIPS and Science Act, enacted in 2022, focuses on US-based research and manufacturing of semiconductor chips.
Semiconductors, such as the electrical circuit “wafers” you see when you open up a computer, are at the heart of much modern technology, including smartphones, TVs, digital cameras, LED bulbs, ATMs, medical equipment, cars — you get the picture. We use them every day without thinking about it.
About 90% of the most advanced semiconductors are produced by one Taiwanese company, Taiwan Semiconductor Manufacturing Company (TSMC). Overall, about 75% of all semiconductors are produced in East Asia. Other countries with growing semiconductor production include Germany and the Netherlands. When the CHIPS Act passed, the US produced just 12% of the world’s semiconductors, far less than we use.
The United States’s biggest supplier of semiconductors is TSMC. If anything happened on the international stage to cut the US off from Taiwan, the US would be in trouble, because we couldn’t manufacture enough of them domestically to fulfill the country’s needs.
To help make the US more self-reliant when it comes to semiconductors, the CHIPS Act committed $280 billion to strengthen the industry, including providing $52 billion in subsidies for US semiconductor manufacturers, including TSMC, South Korean Samsung and US companies like Intel.
Still, there are risks associated with entering what can be seen as a “semiconductor war” with China. Part of the act says that the geopolitical risks will be assessed and addressed. This is another complex aspect of the act that can slow things down.
The CHIPS and Science Act also includes measures like:
- Research and development for the next generation of chips is federally funded, as are programs to accelerate bringing new technology to the manufacturing stage.
- State and local incentives to build chip manufacturing plants are being matched federally.
- A workforce development aspect that prioritizes helping low-income Americans, with a focus on rural areas and communities of color.
The CHIPS Act also funds regional economic development
On top of federal efforts, the CHIPS Act also has many impacts on local economies.
While large technology corporations like Intel are receiving CHIPS Act funds, money also goes to:
- University researchers
- STEM startups that use/develop semiconductors
- Nonprofits involved with semiconductor manufacturing workforce training
- Suppliers to chip manufacturers
- R&D for fabless chip makers
Some of this funding goes through the EDA Tech Hubs program. In 2023, the Economic Development Administration put out a call to economic regions across the US to build a consortium including an institute of higher education, a state or local government entity, private sector firms, economic development groups and workforce representation.
In October 2023, the Biden Administration announced the selection of 31 EDA Tech Hubs, which were qualified to make proposals for grants from $500 million in federal funding to help them build assets, resources and equitable tech jobs. In July, 12 of those hubs were selected as the program’s initial grant recipients.
Cities like Philly and Baltimore received the designation, but not the associated funding.
What’s at risk if the CHIPS Act is abandoned
If executed well, the CHIPS Act will mean more US jobs, both in research and design of chips and in manufacturing them, though it isn’t going to happen overnight.
Arizona, for example, is on its way to becoming a center of the industry, with a major semiconductor fabrication plant (commonly called a fab) under construction in north Phoenix. The state has drawn TSMC, and with it nearly $100 billion in semiconductor investments. Intel also has its main semiconductor campus in the state. Both TSMC and Intel were awarded CHIPS Act funds.
Even with the new semiconductor fabs about a year from opening, working people in Arizona have been impacted by the CHIPS Act. Ironworkers Local 75 in Arizona has grown from 250 members to 1,100 since the act passed.
When the fabs open, they will each employ about 6,000 people, many in good-paying blue-collar jobs that don’t require a college degree and are tied to workforce development training programs.
And it isn’t just Arizona. Twelve Samsung semiconductor fabs are planned for Austin and Tyler, Texas. Four Micron fabs are planned in Upstate New York, in Ithaca, Malta, Macy and what is being called the “largest semiconductor fab in the US” in Clay. Columbus, Ohio is getting two Intel fabs, with Idaho, Utah, Florida and Oregon each building one fab.
The Clay fab alone is expected to create more than 50,000 jobs for the area, which includes other regions like Syracuse, Auburn and Oswego.
If things don’t get derailed, that’s a lot of new jobs, and a lot of potential opportunities in EDA Tech Hub regions.
This post was originally published on here
