The United States Of America is working to address the shortage of chips one factory at one at a time


MARCY, New York – From a distance the brand new Wolfspeed factory in the upstate of New
York looks like any other corporate office building that has a plain grey exterior and big glass
windows. However, inside lies an extremely high-tech facility that’s completely run by a team of
robots that have been programmed to make semiconductors with a high degree of precision. It’s
far away from the manual work of the 20th-century Ford manufacturing line. In fact, it could be
the future of American manufacturing. At the very least according to the executives and
politicians who attended this plant’s grand opening ceremony in late April.

To celebrate the occasion, around a hundred people, which included Wolfspeed employees as
well as investors and local officials, congregated in the large tent that was just a few steps from
the entrance to the factory. A variety of speakers including Wolfspeed and the CEO Gregg Lowe
took turns announcing the importance of the factory to locally-based jobs as well as for the
advancement of technology and for combating the effects of climate change and boosting
American prosperity. The other speaker was Eric Bach, the chief engineer at Lucid Motors, an
electric automaker that just a few hours prior to the announcement that it will begin employing
Chips from Wolfspeed in their automobiles. The show’s star: New York Gov. Kathy Hochul,

claimed the new facility was a part of the”greatest revival ever seen in our nation” prior to taking
the wheel on one of the luxurious Lucid EVs.

“This is what needs to occur. It is no longer acceptable for the country of the United States, to
be brought to the brink due to supply chain problems,” Hochul told Recode. “Make them in New
York! Design these in New York! We’ll invest the money in it.”

Wolfspeed’s plant is opening its doors following more than two years of global shortage of
semiconductors that caused cars to be without part in the market and the health care system
short on medical equipment. To make more chips, the Biden administration along with states is
now planning for a total investment of 522 billion in the chip industry in order to construct
additional factories similar to the one in Utica, New York. The goal is that these factories won’t
only produce more semiconductors, but they’ll create a new era of manufacturing technology in
the same nation that invented computers and developed Silicon Valley decades ago.

The new batch of chip factories often referred to as fabs, will not arrive in time to resolve the
present chips shortage. The facilities are expected to take years to construct and, even after
they’re finished, they won’t be able to create enough chips to meet the demand that the US
makes use of. The government is convinced that they could play an important function in
minimizing the impact of a future disaster such as the climate crisis or another epidemic. They
may also aid in helping the US to regain its leadership position in the sector it started and help
catch up with Taiwan which produces nearly all of the world’s top chips currently.

However, what’s not clear is whether the funding for the building of new factories will be enough
to enable it to happen. The construction of a single fab is an enormous industrial undertaking
which is why building multiple fabs rapidly — is likely to be a massive project. To a certain extent,
it appears that the US is trying to bring domestic technology that for decades has been
manufactured in the world’s supply chains comprised of thousands of companies so the
performance of these new factories will depend on other regions that are in. As the White House
races to claim more of the global manufacturing of chips, other countries like Taiwan are
attempting to do similar things and it’s not certain that the US will have the upper hand it would

How did America has lost its chip recipe

The US used to be the largest producer of chips. In 1947, researchers in Bell Labs created the
world’s first transistor which was a basic electronic switch that could switch a signal on or off.
This device became the base of the integrated circuit commonly referred to as a chip for
computers that incorporated multiple transistors in one device. As technology advanced and
new companies emerged, they began competing not just to create chips that have more
transistors but also to manufacture the chips in a large size. Manufacturing corridors with
high-tech technology were created in Texas and eventually Silicon Valley, paving the way for the
development of advanced consumer electronics and appliances that are often constructed using
chips manufactured in America.

The government played an integral role in ensuring that the US lead the way in the development
of this type of technology. It was the Defense Department was often the first client for the early
semiconductor companies as well as government officials often had required companies to
release their ideas so that other companies could benefit from their designs, too. This helped to
fund the initial research that chip companies could not otherwise afford, and set the basis for the
technology industry we see today. The US employed this strategy of funding — also known as
industrial policy in the latter part of the 1980s when it invested $900 million for an alliance
known as Sematech and where American chip companies sought to make sure that they would
not be outsold by competitors from Japan. In the beginning, the program worked.

However, in the last few decades in recent years, in recent years, the US federal government
decreased its investment in its chip manufacturing industry, while other governments, including
Japan, Taiwan, South Korea, and, in recent times China, as well as the European Union and
China, have increased their investment. The massive subsidies — together with lower costs for
labor have resulted in a lower cost and more affordable for American companies to make
semiconductors overseas. Many have even adopted the “fabless” method of production and
have concentrated their entire operations on the research and development of chips, rather than
manufacturing them. In the end, only twelve percent of the manufacturing of chips in the world
occurs in the US the present, as compared with 37 percent of the production in 1990.

This change has helped one particular firm: Taiwan Semiconductor Manufacturing Company,
also known as TSMC which is a Taiwanese chip maker that produces chips for other
companies. It’s a race to create smaller transistors, so more can fit on a single chip as well
TSMC is currently leading. Because of its manufacturing expertise, Taiwan now makes the
majority of chips, which includes some of the top semiconductors available currently available,
with transistors smaller than 10 to 10nanometers in width. The chips that are the most advanced
are manufactured in the US and this makes the authorities extremely concerned.

“It’s an extremely focused supply chain that is located in specific regions of the world, such as
Korea and Taiwan which has left our economy vulnerable to disruptions as minor events in
certain countries could result in significant cost rises for American consumers, as well as large
disruptions to US GDP.” Sameera Fazili, the deputy director of the Biden administration’s
National Economic Council, told Recode. “They have the most sophisticated high-tech chips,
and we use more than 30% of the chips.”

This worry is based partly, on the fear that China could be able to invade Taiwan at the time and
try to take overtake the control of its chip-manufacturing capacity. There are many additional
reasons to be concerned about the current state of US semiconductors. The US isn’t making
some of the basic or older chips. These are usually made by companies where that are able to
be produced at a lower cost. They are also the ones that went inaccessible during the pandemic
and also made technology difficult to come by and pushed up the cost of cars. The US will also
have to create additional chips to sustain its dominance over the automobile sector because
electric vehicles will likely require at least twice the number of chips as gasoline-powered cars

How do you build an industrial chip factory?

For the production of its chips, Wolfspeed makes use of silicon carbide, which is a
semiconducting material that is particularly useful for chips that power motors, including the
ones in EVs. The silicon carbide is available as transparent discs referred to as wafers. These
are shipped by another Wolfspeed manufacturing facility located in North Carolina. The plant
has a unique furnace that is about half the temperature of solar radiation and is required to
make the material more refined. When the silicon carbide chips are shipped to the Wolfspeed
facility in Marcy the wafers are then sent to a factory floor which is where a tiny army of robots
gradually transform the wafers into chips.

Chipmaking is extremely delicate just the tiniest trace of dust or hair could contaminate a whole
batch of chips. Wolfspeed improves its wafers by using an environment that is clean, a
controlled manufacturing floor equipped with high-quality air filters. In the cleanroom, robots
move wafers through the manufacturing process while technicians watch their progress through
a control room nearby. This is a process that involves lithography which is when tiny patterns
appear printed onto the wafer and a process known as deposition which is the process of
adding layers of metals to the silicon carbide. After these steps are complete and the wafers
have been transferred to a different facility which is where they are cut into chips. The whole
process is automated. On the rare occasion when workers are required to enter the room, they
need to wear protective equipment that resembles an astronaut which includes a complete
bodysuit, face shield, and boots.

Making chips is a complex procedure, but creating an industrial facility that can perform this kind
of manufacturing is more difficult. First of all, the factories can’t be found everywhere. They have
to be near to the power source they depend on as they consume more energy than the
equivalent of 50,000 homes over the course of a year (they produce lots of carbon emissions,
too). a significant amount of carbon dioxide also). They also have to be situated near the water’s
edge that they can use to cool and clean their equipment. This generates waste that must be
treated. Also, it’s best that they aren’t located near any airports or fault lines in the geology;
seismic activity could disrupt the extremely precise equipment they employ.

Then there’s your supply chain. Beyond the fab itself, the process of making chips can require
70 border crossings and over 1,000 steps in all, and even a small interruption in one nation or at
a particular stage can send the entire process off track. It’s because there are not many
alternatives if any, alternatives for supplies if there’s a problem. As an example, one firm in the
Netherlands, ASML, makes the highly-specialized 200 million tools for lithography that a lot of
advanced chip manufacturing facilities rely on. Two companies that are both located in Ukraine
are able to supply around 50% of the special neon gas which fabs around the globe use to
control the lasers. Naturally, the process of securing the security of all this equipment has
become much more challenging due to the epidemic.

“We could not understand this. We were unable to understand that,” John Palmour, Wolfspeed’s
chief technology officer said to Recode. “It was a continual production chain crunch.”

This means that the price of building a fab could be anywhere from $1 billion up between $20
and $1 billion based on the level of complexity of the chips being made. This is the main reason
for the recent rise in demand for chips which was fueled by the need for more automobiles and
laptops but didn’t immediately result in the creation of more chip factories. Since these facilities
require years to approve and build, chip makers don’t want to invest billions of dollars to build
additional factories, as demand will always slow. This is one reason that governments are often
forced to intervene to provide incentives to construct additional chip factories.

The case is clear: New York officials spent years trying to bring companies that make
semiconductors to Marcy which is in which New York state has funded an associated nano
center at the SUNY Polytechnic Institute. Wolfspeed has only signed a contract to acquire the
facility after another company pulled out, and New York offered to subsidize the facility with a
$500 million grant, which is about 50% of its cost for construction. In the near future, more cash
is coming in, and not just for a new Wolfspeed manufacturing facility and possibly larger fabs.
One of them is the new mega fab of $100 billion located in Ohio constructed by Intel, which the
administration hopes will be able to return to “the most advanced technology” and begin to build
the same type of high-tech chips that TSMC manufactures. President Joe Biden, in his most
recent State of the Union address, declared that this plant when it is completed could generate
the equivalent of ” 10,000 new good-paying jobs.”

The big chip placed a bet

Before anything could happen, officials believe that the US must pass the $52 billion package
known as The Chips Act, which would aid in the construction of a variety of new manufacturing
facilities. The legislation is included in a larger proposal known as”the United States Innovation
and Competition Act which is a law that focuses on the competition with China. Although it’s true
that the House version and Senate version of this bill aren’t identical but the plan is supported
by Republicans, Democrats, the White House, and the major chipmakers. The backing from
chip companies isn’t too surprising since the companies involved could potentially receive as
much as $3 billion to construct an entirely new facility, as well as another $2 billion, could be
allocated specifically for the creation of a fab that will concentrate on the more basic chips
utilized in cars.

The proponents of the bill argue that it’s a minimum that’s needed because other countries
continue to subsidize chip production, too. In 2014 China began a $150 billion plan to expand its
manufacturing of semiconductors over the next decade and it has also imported smaller and
smaller quantities of chip manufacturers over the past few years. South Korea plans to spend
around $65 billion to fund its chip program in its own country. The European Union also has its
own $49 billion Chips Act, and its member countries, including Spain and Germany are set to
start their own incentive programs.

“The time is running out a way,” John Neuffer, the director of the Semiconductor Industry
Association, a trade association that represents American chip makers said to Recode.
“Decisions are being taken today regarding where to locate these manufacturing facilities.”

It’s not everyone’s cup of tea It’s basically an aid to corporate shareholders for businesses that
are already very profitable. Senator. Bernie Sanders has been very disapproving of this
legislation Chips Act and has stated that chip makers need to forfeit their equity for huge loans.
Some have suggested that these companies will build manufacturing facilities in the US
regardless of federal incentives since they have a reason to stay clear of the possibility of a
geopolitical conflict. Some critics have pointed out that the industry of chip manufacturing is not
as much of a job-creator as is sometimes promoted and with the majority of the actual
manufacturing of chips being performed automated.

It’s not certain that the funds will actually succeed. The US might not have enough skilled
workers required for chip manufacturing to be able to handle the amount of fabs officials would
like to see. Will Hunt, an analyst at Georgetown’s Center for Security and Emerging Technology
(CSET) believes the new factories will require at least a couple of thousands of international
workers in the event that many of these facilities must employ people with prior work experience
in the field of semiconductor manufacturing. Another issue is that the long permitting and
regulatory procedure could hinder the development of new factories. Moreover, the US is
already building new fabs at a slower pace than other countries that are located in East Asia.
After these facilities have been constructed, they are unlikely to create the number of chips, as
well as jobs they claim to create. companies claim to create.

An official from the White House’s economic team in the White House told Recode that although
the $52 billion is likely to increase American chip production it’s not enough to create the volume
of chips that the US consumes. Still, the administration believes that having the necessary
manufacturing knowledge could prove essential in the event of an emergency. The outbreak has
proven repeatedly that when resources are scarce and countries are trying to acquire the most
sought-after items such as masks, chips, or vaccines and may even employ the products to
influence the international community. Governments prefer other governments to depend on
them rather than and the reverse is true. Also, they would like bargaining chips.

Therefore, it’s not surprising that semiconductors are now leveraged. These tiny chips are all
over the place and have become essential in the lives of most people. There’s no sign that this
will change anytime soon, and this is especially true because more powerful devices that make
use of even more powerful semiconductors are constantly being developed. For as long as the
entire world relies upon this tech, nations are likely to want the most control over chip
technology as they. This means that, although Wolfspeed’s manufacturing facility is in operation,
however, the US is still on a long way to go.

Global computer chip shortage could last for years