Billions in Chips Grants Are Expected to Fuel Industry Growth, Report Finds

Billions in federal subsidies for semiconductor manufacturers are expected to help reverse a decades-long decline in America’s share of global chip manufacturing.

The United States will triple its domestic chip manufacturing capacity by 2032, the largest increase in the world, according to a report released on Wednesday by the Semiconductor Industry Association and the Boston Consulting Group. As a result, America’s share of world chip manufacturing is expected to rise for the first time in decades, to 14 percent by 2032, up from about 10 percent today.

The report found that much of the industry’s growth would be fueled by the bipartisan CHIPS Act, which gave the Commerce Department $39 billion to encourage semiconductor manufacturing in the United States. Absent that legislation, America’s share of global chip manufacturing would have fallen to 8 percent by 2032, according to the report.

The United States is also expected to see a substantial boost in the domestic production of advanced logic chips, which are used in artificial intelligence, smartphones and autonomous vehicles. Bolstering the production of the most advanced semiconductors has been a central goal for the Biden administration. Federal officials contend that in order for the country to lead in major technological industries, it will need to have a more reliable supply of the most advanced semiconductors.

The 2022 CHIPS Act aimed to re-establish the United States as a leader in the production of semiconductors, the vital components that power everything from phones and computers to electric vehicles and weapons systems. In addition to providing grants to chipmakers, the law established federal tax credits that help companies defray the cost of building and outfitting factories with production equipment.

A key finding from the report is that the United States is expected to produce nearly 30 percent of all advanced logic chips by 2032, up from essentially zero today. Some companies that have recently received federal awards have committed to producing leading-edge semiconductors in the United States in the coming years, including Samsung, Intel and Taiwan Semiconductor Manufacturing Company.

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