{"id":37333,"date":"2024-08-20T12:06:09","date_gmt":"2024-08-20T10:06:09","guid":{"rendered":"https:\/\/europeanvalues.cz\/?p=37333"},"modified":"2024-08-22T16:50:37","modified_gmt":"2024-08-22T14:50:37","slug":"the-slumbering-giant-awakens-the-us-ramps-up-chip-production","status":"publish","type":"post","link":"https:\/\/europeanvalues.cz\/en\/the-slumbering-giant-awakens-the-us-ramps-up-chip-production\/","title":{"rendered":"The Slumbering Giant Awakens: The US Ramps up Chip Production!"},"content":{"rendered":"\t\t
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What is happening?<\/h2>

August 9, 2024 marked two years since US President Joe Biden signed one of the most important bills of his presidency \u2014 the US Chips and Science Act<\/a>. In the medium term, many experts view it as one of the most significant pieces of legislation in recent years<\/strong>, helping to shape the trajectory of power competition between the United States and China (PRC). Through government subsidies, loans, tax credits, and other incentives, the law aims to secure self-sufficiency for the US in semiconductor manufacturing<\/strong>, one of today’s most crucial strategic assets. Therefore, it’s important to reflect on this opportunity and examine the temporary results of Biden’s industrial policy.<\/p>

\u00a0<\/h2>

What is the broader picture?<\/h2>

The US, once a global leader in chip design and manufacturing, is now almost entirely dependent on Indo-Pacific countries, particularly on Taiwan’s TSMC, which currently produces about 90 percent of the world’s most advanced semiconductors<\/a>. Meanwhile, US manufacturing capacity has dropped to around <\/strong>8 percent of global microchip production<\/strong><\/a> and 0 percent in the most advanced chip segment<\/strong>. The disruption of global supply chains during the COVID-19 pandemic and increasing Chinese assertiveness has made the critical vulnerability of the US apparent. Such a dependence on countries in a geopolitical hotspot is obviously dangerous. According to some estimates, a crisis in the Taiwan Strait could have economic consequences up to a <\/strong>thousand times<\/strong><\/a> worse than Russia\u2019s war in Ukraine<\/strong>. Under the Chips and Science Act, nearly US$53 billion from the federal budget was to be invested in semiconductor manufacturing capacities within the US, covering R&D and skilled labor, to ensure the Washington’s strategic self-sufficiency from software design to the final production of semiconductors.<\/p>

After two years, some results are already tangible. Through preliminary agreements, the US Department of Commerce has already allocated<\/a> over US$30 billion of the US$39 billion earmarked for building new state-of-the-art factories. Industrial construction spending in the electronics sector has quadrupled<\/a> since 2022, bringing total agreed investments by dozens of companies in electronics and semiconductor manufacturing across the United States to nearly US<\/strong>$400 billion<\/strong><\/a> over three years. <\/strong>Contracts signed<\/a> by the department with companies such as Samsung, Intel, and TSMC are set to establish three separate clusters for advanced microchip production<\/strong> in Arizona, Texas, and Ohio, creating tens of thousands of jobs in various sectors from logistics to manufacturing. A fourth cluster<\/a> is planned in New York State based on agreements with Micron.<\/p>

In terms of R&D, billions of dollars will be invested<\/a> to maintain the strategic technological lead of the US over the rest of the world \u2014 a lead it has held since the Cold War. Additional funding will flow into the production and development of components for<\/strong> military and defense purposes<\/strong>, to ensure the secure supply chains necessary for manufacturing. In this context, for example, a US$35 million grant was approved<\/a> for the British contractor BAE to produce advanced chips for F-15 and F-35 aircrafts.<\/p>

\u00a0<\/h2>

Why does it matter?<\/h2>

The construction of such high-end factories is expected to secure the US roughly 28 percent<\/strong><\/a> \u00a0of the world’s production capacity for the most advanced semiconductors by 2032<\/strong>. However, it’s a long-term effort. Production capacity has not yet significantly increased, and while the country is on track to become a semiconductor powerhouse again in the coming years, the timeline the law envisions could pose a significant problem. By 2027, the PRC is expected to be ready to <\/strong>invade Taiwan<\/strong><\/a>, according to Communist Party rhetoric. If a crisis in the Taiwan Strait or the South China Sea occurs before Western countries can ramp up production and diversify supply chains, the economic and political consequences could be severe, even for the Czech Republic<\/strong>.<\/p>

However, the timeline is not the only obstacle the US might face along the way. There is also the need for a sufficient number of highly skilled workers essential for the complex and technologically advanced production ecosystem. Other challenges could include continued innovation, sustainability of production, and competitiveness of financing, as generous incentives for companies will likely be offered by other countries further from home.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

What is happening? August 9, 2024 marked two years since US President Joe Biden signed one of the most important bills of his presidency \u2014 the US Chips and Science Act. In the medium term, many experts view it as one of the most significant pieces of legislation in recent years, helping to shape the […]<\/p>\n","protected":false},"author":7,"featured_media":37341,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[500],"tags":[552],"class_list":["post-37333","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","tag-ondrej-malek"],"yoast_head":"\nThe Slumbering Giant Awakens: The US Ramps up Chip Production! - European Values Center for Security Policy<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/europeanvalues.cz\/en\/the-slumbering-giant-awakens-the-us-ramps-up-chip-production\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Slumbering Giant Awakens: The US Ramps up Chip Production! - European Values Center for Security Policy\" \/>\n<meta property=\"og:description\" content=\"What is happening? 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