TEXAS CONTRACT MANUFACTURING GROUP
Over the past years, the gap between U.S. manufacturing costs and the cost of product manufacturing in other countries has actually decreased–so significantly that it’s become more economically feasible and responsible to make products like semiconductors in the U.S. The U.S. still dominates engineering across the globe despite that gap in manufacturing costs, and thanks to the decrease, it’s become more of a beneficial choice to have that manufacturing closer to home, and closer to this large and well-established engineering base. This, and recent push for reshoring have resulted in new government policy to support and grow a stronger manufacturing industry in the U.S.
Government policies often have a large impact on the manufacturing industry, and recent events have proven just how easily supply chains can be affected by geopolitical events. Though the recent pandemic offered a stark and grim view of how easily global supply chains can fail, American legislators have long been seeing the cracks in those chains and been trying to find ways to reshore and encourage a more resilient, domestic U.S. manufacturing industry. One excellent example of this, and one of the most recent, is the CHIPS and Science Act, or the CHIPS Act.
The CHIPS Act was signed into law in 2022 as a large government investment in reshoring semiconductor production and its relevant supply chains in the U.S. Semiconductors are the literal backbone for any type of electronic device or system, no matter how simple or complex, and have become crucial for just about every type of manufacturing industry in the world, through both indirect and direct impacts. Even if you’re a manufacturer that doesn’t directly serve some sort of electronics market, you likely still use computerized equipment, tablets, monitoring systems, even facility security systems–all of which are driven by semiconductors.
Though the CHIPS Act had long been in the works, the global pandemic in 2020 provided a major and devastating example of just how unstable global supply chains are, which helped to garner enough support for it to be passed into law shortly after the pandemic’s start. At its most basic, the act provided funding to anyone in the semiconductor industry looking to reshore their fabrication and build a more resilient domestic supply chain. According to a recent blog post by the Semiconductor Industry Association, there are already 90 new semiconductor ecosystem projects in the works all across the U.S. at all levels of the supply chain, as well as 58,000 new jobs announced to support these new facilities and infrastructure. In addition, many investments are already underway, supporting the creation of stronger domestic manufacturing capabilities for the industry.
Between the decreased gap between manufacturing costs in the U.S. compared to other countries, increased information security and cybersecurity risks, and the obvious lack of resilience in global supply chains, the CHIPS Act intention was to serve as a catalyst to inspire semiconductor manufacturers to invest in either reshoring or remaining in the US.
However, this hasn’t been some huge, massive overhaul of the industry. These are changes that will take a long time to take hold, as the domestic supply chains are built out and integrated into existing systems. The changes are likely to be gradual, but impactful, and are likely to result in more jobs across the manufacturing sector, especially in these higher-tech industries. Investments have already been made though–TCMS Arizona was recently awarded funding to build three semiconductor fabrication plants in the Phoenix area, as was Micron which received funding to construct three new facilities in the northeastern U.S.
Still, legislature and polices like the CHIPS Act aren’t going to change all of this by itself. A lot of work has to be done by everyone involved–everyone with a stake in the semiconductor industry which is nearly all of manufacturing in our modern age as well as the government itself–to keep pushing for this change, and to encourage more and more efforts to build and improve the U.S. semiconductor industry, especially as more data is collected on SCRM and the industry as a whole, and the inevitable challenges are encountered.
The impacts of the CHIPS and Science Act are still ongoing, and likely won’t be fully recognized until many years from now, but we can still see some of the real, practical changes that have resulted from it. And this is just scratching the surface–there are plenty of complexities that haven’t even been addressed in this article, and many more impacts that recent manufacturing policies in the U.S. have and will continue to have in the future.
