Establishing Leadership in Advanced Logic Manufacturing: What would it take?

By Tom Quillin, senior director, Global Government Affairs for Intel

Today, Boston Consulting Group (BCG) issued a report in partnership with Intel, titled “Establishing Leadership in Advanced Logic Manufacturing: What Would it Take?”, which further reinforces the urgent need for Congress to pass funding for the CHIPS for America Act this year.

Semiconductors play a fundamental role in today’s economy. Until 2018, the United States was the global technology leader in advanced logic manufacturing. Today, while still a global leader in semiconductors overall, the US depends heavily on East Asia for chip manufacturing, and particularly for advanced logic chips. Advanced logic chips are essential for most of the United States’ strategic technologies and priority defense system modernization programs.

The current global chip shortage has brought these challenges into focus by disrupting chip supply chains and increasing our reliance on the vast range of products they power. These shortages have upended the automotive industry and present a threat to every industry and organization that uses semiconductors—no factory, no hospital, no military base, no store can operate without them.

In the report, BCG identifies a critical cost gap between the US’ current capacity and capability, and its future needs. It is ~30% more costly to build and operate fabs in the US relative to other countries that have advanced logic, primarily due to significant government incentives available in East Asia.

Additionally, while incentivizing new advanced logic fabs in the US is a necessary first step and would reduce current reliance on East Asia, reestablishing US leadership in advanced logic process technology is equally essential and involves three interrelated elements:

  1. Regaining manufacturing process technology leadership with IP and know-how developed and based in the US;
  2. Aggressively building US-based leading node fab capacity—enough fabs for the US to supply critical domestic consumption and maintain leadership; and
  3. Developing complementary advanced packaging capabilities implemented in state-of-the-art facilities in the US.

The time is ripe to regain American semiconductor manufacturing leadership.  According to BCG, a large amount of new capacity needs to be built globally to meet expected future growth in demand for advanced logic semiconductors. BCG estimates that at least 45 leading node fabs of 35,000 wpm of capacity will have to be in production by 2030, a major increase from the approximately six equivalent sub-10 nm fabs reported to be already operational in 2020.

This strategic challenge will require substantial commitment from the private sector over multiple years, supported by comprehensive US public policy. As the American leader in semiconductors, Intel is doing its part to support domestic semiconductor manufacturing. Intel employs more than 53,000 people at U.S.-based innovation hubs in Oregon, Arizona, California, New Mexico, and Texas, providing America with the capacity and capability to drive technology leadership. We directly contributed more than $25 billion to U.S. GDP in 2019, with a total U.S. GDP impact to the U.S economy of $102 billion.

We are expanding our domestic manufacturing capacities this year, with a $20 billion investment in two advanced semiconductor manufacturing facilities in Arizona and a $3.5 billion advanced packaging facility in New Mexico this year. In addition, we have already announced plans to invest billions more to build new additional capacity within the U.S., contingent on funding for the CHIPS Act.

The impact of these investments on the American economy is significant. The semiconductor industry directly supports 250,000 jobs, indirectly supports another one million jobs, and supplies digital infrastructure to countless employers across the country. Federal support would protect these jobs, unlock additional private investment in domestic manufacturing, ensure our military has reliable access to advanced technologies, and secure supply chains across the economy.

The private sector is investing heavily in American technology expertise and capacity. It is time for Congress to do the same.