If the recent supply chain crisis has taught manufacturers one thing, it’s the importance of building new U.S. plants to avoid product shortages due to a supply breakdown overseas. A good example is the semiconductor industry which suffered a severe availability disruption during the Covid pandemic. As of last year, automakers alone lost well over $200 billion in sales due to the shortage of chips that were primarily being fabricated in China, Taiwan, and South Korea.
To avoid future supply chain crunches, the government and semiconductor manufacturers are investing billions of dollars to rapidly build new plants right here in America. Today U.S. companies continue to dominate the design of chips and software tools to translate the designs into semiconductors, so it only makes sense to consolidate the entire supply chain by producing the chips in America as well. It should also be noted that semiconductors were invented and commercialized by American scientists and engineers in the 1940s. Little did they know that the semiconductor industry would grow to become as essential to modern economics as oil. Intel’s CEO, Pat Gelsinger, has stated that while the location of oil reserves once defined geopolitics, today the locations of chip factories have become more important.
But there are obstacles to address in this new Made in America initiative to successfully regain its share of semiconductor manufacturing. One challenge is to gauge the longevity of the demand for chips. The recent chip shortage from the pandemic crisis has abated somewhat but there still appears to be a high need for basic and advanced chips used in computers, smartphones, servers, automobiles, and a variety of everyday appliances. There’s also the challenge of securing a qualified labor force in the U.S. due to high costs and scarcity.
Despite these challenges, the bet to invest in expanding U.S. manufacturing facilities makes total sense. Since 2020, over 40 semiconductor projects have been proposed in the states that are valued at $200 billion and would create an estimated 40,000 new jobs. And while it’s unlikely America will succeed in acquiring the entire semiconductor supply chain, it does have the opportunity to regain dominance in the manufacturing industry that it invented. Maybe this will be the first of more to come.