Semiconductor Manufacturing: We’re Number 5
In 1990, some 37 percent of advanced semiconductor chips were manufactured in the United States; by 2020, the percentage had fallen dramatically to just 12 percent. Not only had production fallen, but the US lacked the capability to produce the most advanced chips in volume. Foreign competitors, particularly China, have invested heavily in this vital industry, fueled by government subsidies.
ASML in the Netherlands is the only manufacturer in the world making microchips that are essential to produce semiconductors. These microchips contain billions of transistors, making the chips faster, more powerful, and more energy efficient. ASML (for Advanced Semiconductor Materials Lithography) employs EUV (extreme ultraviolet) lithography to create the tiny circuitry found in computer chips, and its most recent tool, a High NA EUV, the size of a double-decker bus and costing $350 million, will help develop a new generation of even smaller and faster chips. The giant chip makers, TSMC in Taiwan, Samsung in South Korea, and Intel in the United States, rely on the ASML technology and products. Everything from smart technology found in automobiles and mobile phones, to augmented reality, and artificial intelligence rely on EUV technology. In 2024, an Intel facility near Hillsboro, Oregon, using High NA EUV technology, was under production and a major TSMC plant in Arizona was near completion.
One estimate finds that within the next decade, there will be a 53 percent increase in the demand for such semiconductor chips. For many policymakers in the US, these daunting facts showed how imperative it was to enact legislation boosting the US semiconductor industry.
In July 2022, through a rare bipartisan vote, Congress passed the CHIPS and Science Act, designed to strengthen domestic semiconductor manufacturing, research and development, and tax credits for chip manufacturing. To protect domestic competitiveness in this field, the CHIPS Act provided safeguards to ensure that those companies receiving federal funds could not build advanced semiconductor production facilities in countries that present national security concerns. As the Biden White House noted, “America invented the semiconductor, but today produces about 10 percent of the world’s supply—and none of the most advanced chips. Instead, we rely on East Asia for 75 percent of global production. The CHIPS and Science Act will unlock hundreds of billions more in private sector semiconductor investment across the country, including production essential to national defense and critical sectors.”
As Reuters noted, “The CHIPS Act will have a broad impact, bolstering US leadership in wireless technology, and CHIPS funding will benefit not only US chip manufacturers, but also U.S. universities, K-12 STEM educational programs, and regional hubs among other advancements in innovation.”
Sources: “The ‘NA’ in the name refers to numerical aperture – a measure of the ability of an optical system to collect and focus light. And it’s called High NA EUV because we’ve increased the NA from 0.33 in our NXE systems to 0.55 in EXE systems. The higher NA is what gives the systems their better resolution.” In Christine Middleton, “Five Things You Should Know About High NA EUV Lithography,” ASML, January 24, 2024, https://www.asml.com/en/news/stories/2024/5-things-high-na-euv; “EUV Lithography Systems,” ASML, n.d., https://www.asml.com/en/products/euv-lithography-systems. “Semiconductor Manufacturing by Country,” World Population Review, https://worldpopulationreview.com/country-rankings/semiconductor-manufacturing-by-country. “CHIPS and Science Act Will Lower Costs, Create Jobs, Strengthen Supply Chains, and Counter China,” The White House, August 9, 2022, https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/09/fact-sheet-chips-and-science-act-will-lower-costs-create-jobs-strengthen-supply-chains-and-counter-china/. CHIPS is an acronym for “Creating Healthy Incentives to Produce Semiconductors.” Michelle Schulz, “Passage of the CHIPS and Science Act: What does This Mean for US Export Controls? Reuters, September 7, 2022, https://www.reuters.com/legal/legalindustry/passage-chips-science-act-what-does-this-mean-us-export-controls-2022-09-07/.
