Yogi Berra once said, “If you don’t know where you are going, you end up somewhere else.”
In an industry as important as semiconductors, “somewhere else” won’t cut it. Semiconductors, or microchips, are the brains of modern electronics—and they’re central to America’s economic and national security future.
For the U.S. to lead the world in semiconductor manufacturing and innovation, we need to know where we’re going.
The CHIPS and Science Act, signed into U.S. law in 2022, represents a crucial first step. The historic initiative appropriates $52 billion for semiconductor research and manufacturing programs while establishing a temporary tax credit specific to semiconductors.
To succeed, the CHIPS Act needs a roadmap, a plan to guide our actions today and in the decades to come.
For that plan, look to the National Semiconductor Economic Roadmap (NSER).
A national strategy, industry led
NSER (pronounced “answer”) is a 10-year industry-led plan for increasing U.S. competitiveness in semiconductor manufacturing and strengthening supply chain resilience, charting a path for leaders in industry, government, and academia to strengthen the manufacturing ecosystem for a technology the U.S. invented.
NSER offers rigorous data and analyses, establishing clear goals and objectives across four domains: infrastructure, supply chain, workforce, and entrepreneurship. States including Arizona are pioneering innovative solutions to advance these four objectives.
In November 2022, Arizona announced $100 million in funding to enhance its semiconductor infrastructure, workforce, and research capabilities, with a focus on the accelerated development, commercialization, and manufacturing of next-generation U.S. semiconductor-based technologies.
In addition, innovative programs like Semiconductor Technician Quick Start are directing more women and minorities to the industry. A partnership of the Maricopa Community Colleges, Arizona Commerce Authority, and Intel, this two-week, 40-hour boot camp teaches fundamental skills and includes the opportunity to interview with Intel upon graduation.
Reversing a semiconductor slide
In recent decades, the U.S. has experienced a steady decline in semiconductor manufacturing as production capacity shifted overseas, with China and other countries in Asia investing heavily in chip manufacturing and research and development (R&D). On its current path, the U.S. share of microchip manufacturing could decline from 11% today to 8% by 2033—down from 40% 30 years ago.
Realizing the full value of the CHIPS Act and growing the entire manufacturing ecosystem will require policymakers, industry players, academia, and other stakeholders to work together in areas of precompetitive common interest.
If these stakeholders achieve NSER objectives, the U.S. could capture as much as 30% of capital investment in the semiconductor industry globally over the next 10 years, according to Boston Consulting Group. That could increase the U.S. share of global capacity by as much as 17%, reversing the decades-long slide.
A shift of this magnitude would have significant benefits for U.S. economic resilience, driving the creation of thousands of high-paying jobs, advancing our technology leadership, and strengthening U.S. national security.
So where do we begin? NSER begins with infrastructure.
Enhancing domestic infrastructure
Semiconductors represent one of the most capital-intensive sectors in the U.S. economy. Chip manufacturing requires physical sites, equipment, and transportation infrastructure in addition to a well-educated workforce and R&D facilities.
NSER’s long-term vision involves aligning the domestic regulatory and incentive environments with competing markets to increase U.S. attractiveness, investing in shared R&D infrastructure to encourage collaboration, and enhancing infrastructure to improve sustainability.
Increasing supply chain resilience
The semiconductor supply chain’s extreme complexity puts the U.S. at great risk of disruptions of the flow of goods and services. These risks most acutely apply to materials, wafer fabrication, and packaging, assembly, and testing (PAT).
The East Asia region accounts for approximately 80% of all PAT capacity, 40% of it in mainland China. The U.S. supports less than 5% of global PAT capacity.
To improve U.S. resilience, NSER prescribes increased onshore, near-shore, and friend-shore activities. This effort should include establishing dependable sources of materials, consumables, intermediary products, and equipment while increasing domestic semiconductor-manufacturing capacity.
But because complete onshoring would be expensive and impractical, the roadmap also advocates maintaining U.S. access to global markets and improving supply chain visibility.
Solving the people problem
One of the semiconductor industry’s greatest challenges is building its workforce. In the U.S., the sector employs roughly 277,000 workers. To meet the future labor demands NSER envisions, that labor pool would need to grow by hundreds of thousands of people over the next decade.
Attrition rates; declining interest among American students in science, technology, engineering, and mathematics; and inflexible immigration barriers contribute to the obstacles.
NSER proposes a robust set of actions to bolster the talent pipeline by ensuring equitable and inclusive access to training, increasing skilled-worker retention and addressing reversible attrition factors, and ensuring the workforce remains adaptable to evolving industry needs.
Empowering entrepreneurs
Entrepreneurs contribute to the semiconductor industry by improving processes and production methods, often resulting in incremental gains that catalyze U.S. competitiveness and elevate the entire industry.
The challenges entrepreneurs face, however, are substantial, such as attracting funding and accessing the facilities, equipment, and materials manufacturers require to test products.
NSER recommends the expansion of private, government, and academic investments in entrepreneurs; improving access to facilities and knowledge; and fostering a spirit of collaboration among research universities, startups, and industry players.
The CHIPS Act has reinvigorated the U.S. semiconductor industry for the 21st century. To capitalize on this momentum, the sector now must take heed of the bigger picture and act quickly to improve the entire manufacturing landscape. NSER is the industry’s roadmap to success.
Read more about the National Semiconductor Economic Roadmap here.