3 ways the global semiconductor shortage is hitting the US hard

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President Joe Biden’s executive order calling for a review of supply chains for critical products has highlighted the decades-long decline in semiconductor manufacturing capacity in the United States. Semiconductors are the logic and memory chips used in computers, phones, vehicles, and devices. The United States’ share of global semiconductor manufacturing is only 12 percent, down from 37 percent in 1990, according to the Semiconductor Industry Association.

It may not seem important that 88% of the semiconductor chips used by U.S. industries, including the automotive and defense industries, are made outside of the U.S. However, three issues cause them to are made critical for the United States as a world leader in electronics: capacity, high global demand and limited investment.

Lower capacity

The growing dependence of American chip companies on international partners to manufacture the chips they design reflects the reduced capacity of the United States. U.S. semiconductor companies have 47 percent of the global chip sales market, but only 12 percent are made in the U.S. Meeting the expectations of ever faster and smarter electronics requires design innovation. chips, which, in turn, depends on the most advanced manufacturing technologies available.

Advances in semiconductor manufacturing are based on the number of transistors, the smallest electronic component on a chip, per square millimeter. The most advanced semiconductor manufacturing technologies and facilities, called fabs, are labeled as 5 nanometers, or millionths of a millimeter. The number refers to the process rather than a particular function of the chip. As a rule of thumb, the smaller the nanometer, the more transistors per square millimeter, although this is a complicated picture with many variables. The highest transistor densities are around 100 million per square millimeter.

Taiwan and Samsung in South Korea are developing 3-nanometer factories while the United States does not yet have a 7-nanometer fab. Intel has announced that its 7-nanometer factory won’t be ready for production until late 2022 or early 2023. That leaves the United States without the means to make the most advanced chips.

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High global demand

With the pandemic, the demand for cellphones, laptops and more work at home and the increased use of the Internet have prompted factories to increase the number of chips they ship for these products. The global auto industry has predicted that demand for cars will drop during the pandemic, so it has cut back on orders for solid-state chips used in safety, control, emissions and driver information systems. The auto industry has revived production but now faces a shortage of semiconductor chips.

Eight state governors recently called on Biden to step up efforts “to urge wafer and semiconductor companies to expand production capacity and / or temporarily reallocate a modest portion of their current production to production. of automatic quality wafers ”. This “modest” reallocation cannot be done without causing shortages elsewhere. And it cannot be done quickly. For example, Taiwanese semiconductor giant TSMC reported a six-month delay between ordering and delivery, and production of a chip is expected to take up to three months.

worker wearing face mask and finger gloves holds semiconductor chip