Published December 14, 2021
Here are several very important truths about semiconductors:
- Semiconductors are the building blocks of modern economies and having a robust semiconductor production capability in the U.S. is key to our national security.
- Twenty years ago, the U.S. produced almost 40% of the world’s chips.
- Today, about 75% of global semiconductor production capacity is based in four Asian countries: Taiwan, South Korea, China and Japan. The U.S. only produces 13% of the world’s semiconductors.
- Interest in electronic devices and equipment has skyrocketed since COVID-19 and current global semiconductor production capacity is inadequate.
- Capital expenditures in semiconductor production have skyrocketed but the U.S. is only capturing about 14% of the total expenditures, whereas Asia is capturing more than 80%.
- U.S. manufacturing in many industries is being disrupted by the lack of availability of semiconductors.
- The U.S. government must provide incentives that match those being put forth in other countries. Only once this is done will the U.S. production of semiconductors support the prosperity of our future economy and national security.
The one semi-truth about semiconductors that I have seen time and time again is that the semiconductor challenges are a result of supply chain issues. Well, this is true as production is a key process in many supply chains, but the real problem is a not a supply chain issue, it’s a production capacity issue. So, let’s not disguise our semiconductor challenges as being supply chain challenges, but more accurately establish that semiconductor production challenges are the cause of many of the supply chain challenges we are experiencing in business today. The solution to this problem is not in the supply chain, but in the U.S. government properly providing incentives for companies to invest in U.S. semiconductor production.