2023-09-30 15:23:57
Special: America supports the local chip industry
The United States of America continues to strengthen its efforts aimed at regaining its leadership role in the world of electronic chip manufacturing, as the authorities in the “General Sam” countries are currently preparing to begin distributing part of the funds allocated by the “Chips and Science Act” to support the transfer of global chip factories to American territory. This coincides with the first anniversary of the law’s approval.
The “Chips and Science” proposal was enacted by the US Congress and signed by President Joe Biden to become a law effective on August 9, 2022, according to which an amount of $280 billion was allocated as support packages to enhance domestic research and semiconductor manufacturing in the United States over a period of 10 years. .
Under the “Chips and Science Act,” the $280 billion amount was divided as follows:
About $200 billion to support research, scientific development, and marketing. About $52 billion to support semiconductor manufacturing operations and research and development on American soil. $24 billion in tax breaks on chip production. $3 billion for programs that support technology development and wireless supply chains.
America’s plan is on the right track
While the “Chips and Science” Act celebrates its first birthday, it seems that the plan that America hatched under this law is on the right track to regain the “throne” of the chip industry, which is considered the “oil of the future” or “new oil.”
Many chip manufacturing companies have announced investments worth more than $200 billion in the country, and if things go as planned, in 2025, American chip factories will be able to secure regarding 18 percent of the global production of advanced chips.
In the past, the United States was considered one of the pioneers in the manufacture of electronic chips in the world. It controlled regarding 40 percent of this industry in 1990, but its market share has eroded, and today it is approximately 10 percent. This decline is caused by the transfer of factory production. Electronic chips move from American territory abroad, specifically to East Asian countries, due to the low production and operating costs there.
TSMC chips Samsung with the slogan “Made in America”
Currently, the giant Taiwanese company TSMC is spending regarding $40 billion on building two factories in the US state of Arizona, while the South Korean company Samsung is investing regarding $17 billion to manufacture its chips in Texas. Although these companies are not American, Washington wants to carry TSMC and Samsung chips. “Made in America” logo.
On the other hand, American companies also play a major role in the return of the country’s chip industry to its previous state, as Intel will spend $40 billion on building four factories in Arizona and Ohio.
At this time, the American authorities are preparing to spend a package worth $39 billion, and other loans and loan guarantees worth $75 billion, for companies that have met the harsh standards and conditions, to benefit from the support provided by the “Chips and Science” Act, most notably the failure of the companies benefiting from the financing to increase… Produced or expanded its manufacturing area in China.
The size of the electronic chip market around the world currently amounts to regarding $430 billion, and Taiwan and South Korea are among the most prominent players in this market, as Taiwan alone controls more than 60 percent of the global production of chips, while Korea’s share exceeds 15 percent, replacing America. In third place with a share of 10 percent, then China with a share of approximately 7 percent.
Although the electronic chip industry is under the complete control of America’s allies, namely Taiwan and South Korea, Washington wants to return this industry to its lands, and keep it as far away from Chinese areas of influence as possible. In light of the digital transformation that the world is witnessing, electronic chips have become the vital backbone of multiple industries. Therefore, the United States of America believes that fortifying the country with an arsenal of advanced chip production plants will protect its national security and prevent any party in the world from paralyzing its ability to develop in various fields.
Without electronic chips, which are small metal pieces made of silicon, any smart product in the world has no value, as their lack of availability means that electrical appliances, mobile phones, cars, airplanes, communications networks, data centers, computers, and production devices in modern laboratories and medical devices, Weapon systems, aircraft, military missiles and nuclear weapons will not be able to operate.
Digital transformation expert Rabih Saadeh said, in an interview with the “Eqtisad Sky News Arabia” website, that a year following the US President signed the “Chips and Science” law, giant chip production companies, such as TSMC, Intel, and Samsung, have been planning to open their factories in the United States. United States to benefit from the effects of the law, but despite the incentives granted by the law, these companies found that they will face fundamental challenges that may affect their future profits.
According to Saadeh, these challenges can be summarized in three points:
The time it takes to build factories in the United States is estimated at regarding 900 days, compared to 650 days in Taiwan and China, where the reason for the slow process of establishing factories in America is due to bureaucracy in completing transactions, as companies must navigate through a large group of federal regulations, State and local governments, increasing the average time to complete the construction process to more than 900 days.
– The high operational cost due to the costs of building factories and wages, as the cost of building a new factory in America is regarding 40 percent higher than in Asia, while the annual operating expenses of factories in America are 30 percent higher compared to Asia, partly due to the high Wages of American workers.
The size of factories in the United States of America is smaller than their counterparts in Asia, which means that the production capacity of factories in America will be less than that in Asia, and what makes matters more complicated at this point is
The difficulty that companies face in finding a sufficient number of workers with experience in the semiconductor industry, and this is what prompted the Taiwanese company TSMC to postpone the launch of its first factory in Arizona for one year, until 2025.
Saadeh believes that these three challenges will be reflected in an increase in the prices of electronic chips manufactured in the United States compared to their counterparts manufactured in Asia, at a time when the demand for chips appears to be declining, at least in the short term, which may have consequences on the industry’s profitability in the long term. It is expected that Chinese companies will respond to the effects of the “Chips and Science” law by working to reduce chip prices.
Which puts downward pressure on prices.
The “chip” law is a victory for America
For his part, Alan Al-Qarih, an analyst and writer specializing in technology and artificial intelligence, said in an interview with “Iqtisad Sky News Arabia” website, that America considers the “Chips and Science” law as a victory for it, and it is indeed so because it contributed, within one year, to the expansion of the local chip industry, This will make Uncle Sam’s country less dependent on the Asian market that is close to Chinese influence, stressing that America’s possession of a series of electronic chip production plants will serve as a “protective shield” that secures its independence in terms of the ability to engineer, design and produce this strategic commodity on its territory, which is what It is a great achievement.
Al-Qarih explains that it can be said now that America is on the right path to tightening its control over three sections that make up the electronic chip industry. It already dominates 85 percent of the areas of research, development and design for chips, and it also controls everything related to equipment and lines. Chip production, and is currently moving at an accelerated pace to restore the production, packaging and distribution factories that this industry needs. Given the central role of chips in modern economies, specifically in the era of artificial intelligence, what the “Chips and Science” Act was able to achieve in its first year confirms that the American industry will be the biggest beneficiary. In terms of ensuring its technological superiority, especially since the chips that America will produce belong to the very advanced category, meaning that they are designed with a precision of 3 nanometers, and support artificial intelligence techniques.
According to Al-Qarih, the cost of electronic chips manufactured in America, due to many factors, will be higher compared to their counterparts manufactured in Asia, but from a strategic perspective, this matter does not matter to America, which looks at the matter from a different perspective, which is to preserve its national security, indicating that Washington is aware of the difference in prices, and therefore, through the financial support it provides with the aim of regaining the “throne” of the chip industry, it will seek to cover this difference, taking into account that the cost of manufacturing chips in America will decrease as the rate of production in the country increases, and this matter will be achieved over time.
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