CHIPS Act No Panacea for US Chip Woes

There are at least two big missing pieces in the CHIPS Act of 2022, the US$52 billion subsidy for US-based semiconductor manufacturers that has just been sent to President Joe Biden for his signature.

The first missing piece is definitional. There is no statement in the Act of what constitutes an “advanced” semiconductor. Second, not only is there no priority on military capability, but there is also no requirement or guidance for protecting newly developed technology funded under the Act.

To begin with the question of what constitutes an “advanced” semiconductor, Intel is investing $20 billion in a new manufacturing facility, or fab, in Columbus, Ohio. The new plant intends to manufacture semiconductors with feature sizes of 5 nanometers (nm), smaller than the 14-nm used in most of today’s products; “advanced” chips are generally considered between 7-nm and 3-nm.

Intel made it clear that “no subsidy, no plant.”

Advanced chips with very small feature sizes offer very high performance and low power consumption. Computation-intensive applications, such as fast Fourier, transform iterations for submarine detection or high-speed calculations in artificial intelligence, cannot be achieved on slow general purpose processors.

China has already succeeded in making a basic chip at 7-nm, but assessments of the technology suggest it was done using older processes and the chip lacks some advanced features. It isn’t clear how quickly China will be able to sustain 7-nm chip production, though perhaps in a few years. If so, China could come online with commercial and military products even before the Intel facility is running in Ohio.

Most American companies, such as Intel and Nvidia, outsource their advanced chip production either to Taiwan Semiconductor Manufacturing Company (TSMC) or Samsung in South Korea. Both are producing 5-nm chips, and reportedly TSMC is moving to 3-nm and 2-nm classes, with production expected to start in the next few years.

Read the rest at Asia Times.

Stephen Bryen is a Senior Fellow at Yorktown Institute.


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