Inside the Battle to Boost US Semiconductor Manufacturing
Semiconductors – the chips that underpin virtually all modern technologies – stand as one of the most transformative inventions in all of human history.
Thanks to 65 years of groundbreaking advancements across manufacturing, research and design, todays semiconductors can contain up to tens of billions of transistors on a small slice of silicon.
Their importance was highlighted during the infamous and often crippling semiconductor shortage of 2020-2023 that impacted more than 169 industries.
Originating from the supply chain disruption and shift to a stay-at-home economy necessitated by COVID-19, the availability of key chops necessary for manufacturing a broad range of electronics dramatically dropped, impacting a diversity of industries from automotive to console gaming.
In 2023, despite cyclical market downturn in the first quarter of the year, global sales of semiconductors rebounded to reach US$527bn.
Nearly one trillion semiconductors were sold globally – more than 100 chips for every person on earth.
The demand and sales of semiconductors is even greater in 2025, with them a huge factor in the current geopolitical and trade landscape of modern manufacturing.
Technology is the big competitive differentiator across global sectors including manufacturing, meaning nations like the US that lack a solid semiconductor manufacturing base are at a disadvantage.
The US' current position
The US only manufacturers a small portion of the world's semiconductors, with none among them being classified as the most advanced types.
In fact, the US share of semiconductor manufacturing has actively declined from 37% in 1990 to 12% today.
The industry also faces a significant talent gap, that is more prominent and impactful than other US manufacturing verticals.
According to the Semiconductor Industry Association's (SIA's) State of the US Semiconductor Industry 2024 report, a 2023 SIA-Oxford Economics study projected a shortfall of 67,000 technicians, computer scientists and engineers in the semiconductor industry by 2030 and a gap of 1.4 million such workers throughout the broader US economy.
Efforts have been taken however to address this gap in semiconductor manufacturing, which have been concentrated into the CHIPS and Science Act.
Introduced by the Biden Administration, the CHIPS and Science Act of 2022 set aside roughly US$50bn to fund a series of initiatives, programmes and incentives to boost advanced semiconductor manufacturing in the US.
Among this was the founding of the CHIPS Program Office (CPO) responsible for deploying a US$39bn CHIPS manufacturing incentives programme.
This programme provides incentives for investments in slurries and fabrication facilities in addition to the manufacturing investment credit (AMIC) intended to encourage investments in the industry.
Manufacturers like Intel have received funding under the CHIPS and Science Act, the aim of which is to ensure a more technologically-advanced US, boosting economic development, manufacturing and national security.
Progress made by the CHIPS and Science Act
SIA's 2024 report also highlights the progress that the CHIPS and Science Act has made in boosting semiconductor manufacturing.
As of August 2024, companies in the semiconductor field have announced more than 90 new manufacturing projects in the US, totalling nearly US$450bn in announced investments across 28 states, which are set to create thousands of direct jobs and support hundreds of thousands of additional jobs across the US economy.
A SIA-Boston Consulting Group Report predicts that, in the decade following CHIPS enactment, the US is projected to more than triple its semiconductor manufacturing capacity – the highest rate of growth in the world during that period.
The report also indicates that the US may grow its share of advanced (less than 10nm) chip manufacturing to 28% of global capacity by 2032.
If the CHIPS Act did not exist, the report estimates the US will only have captured only 9% of global capex by 2032.
This data makes US President Donald Trump's recent comments on the act a critical concern for the nations manufacturing sector.
Could the act end under President Trump?
During his joint address to congress on 4 March, President Trump suddenly demanded that Congress "get rid of" the CHIPS and Science Act, calling it a "horrible, horrible thing."
The bipartisan legislation, which won over 17 Senate and 24 House Republican,s was inspired by legislation created by Congress during Trump's first term.
Ending the act would be an extremely complicated process, both politically and legally, with the semiconductor industry reacting with confusion and uncertainty.
These comments mark a escalation of President Trump's previous criticisms of the CHIPS and Science Act as a wasteful giveaway to rich companies, arguing that tariffs could serve the same goal without incurring any costs. This argument does have merits considering the landmark deal the Trump Administration has just made with TSMC, the Taiwanese leader in global semiconductor manufacturing.
Semiconductor manufacturing contributes up to 15% of Taiwan's GDP, with TSMC being its largest and most advanced manufacturing company.
Many economists and geopolitical commentators describe semiconductors as Taiwan's "silicon shield", leverage for all the world to fight China's longstanding ambition to annex the nation.
With President Trump shifting his prioritisation of defending Taiwan's souvreignty, leveraging this industry has become even more vital for the country.
This will be the biggest foreign direct investment on US soil in history, with TSMC boosting its existing US$65bn US presence by a whopping US$100bn.
For TSMC, a key factor in pursuing the deal has been avoiding the massive tariffs President Trump has flagged for the global chip industry.
The US will benefit through the creation of thousands of construction jobs and the eventual deployment of advanced technologies on US soil.
Inside the deal with TSMC
The investment plan will build on TSMC's existing US$65bn investment in advanced semiconductor manufacturing operations in Phoenix, Arizona.
TSMC also operates a fab in Camas, Washington, and design service centres in Austin, Texas, and San Jose, California.
The expansion includes plans for a major R&D team centre, three new fabrication plants and two advanced packaging facilities. It is also expected to drive more than US$200bn of indirect economic output in Arizona and across the US in the next decade.
This move underscores TSMC’s dedication to supporting its customers, including America’s leading AI and technology innovation companies such as Apple, NVIDIA, AMD, Broadcom, and Qualcomm.
TSMC's Arizona fab currently employs more than 3,000 people on 1,100 acres of land in Arizona, with the site having been in volume production since late 2024.
This expansion will play a crucial role in strengthening the US semiconductor ecosystem by increasing American production of advanced semiconductor technology.
It will also complete the domestic AI supply chain with TSMC’s first US advanced packaging investments.
“Back in 2020, thanks to President Trump’s vision and support, we embarked on our journey of establishing advanced chip manufacturing in the US," added Dr. C.C. Wei, Chairman and CEO at TSMC. "This vision is now a reality.
“AI is reshaping our daily lives and semiconductor technology is the foundation for new capabilities and applications. With the success of our first fab in Arizona, along with needed government support and strong customer partnerships, we intend to expand our US semiconductor manufacturing investment by an additional US$100bn, bringing our total planned investment to US$165bn."
It is clear that the battle to secure the future of the US semiconductor industry continues.
With deals like this with TSMC, progress is being accelerated.
But fundamental questions remain over whether tariffs or incentive programmes like those under the CHIPS and Science Act will be better at boosting US semiconductor manufacturing.
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