Countries go on to work toward semiconductor manufacturing resiliency. It is well to be noted that the worldwide semiconductor shortage as well as new programs and plants have indeed gone on to create headlines over the last year. The fact is that in the coming months, subsidies to support semiconductor manufacturing will indeed be awarded to selected chipmakers.
As per the reports, the Biden Administration will soon go on to announce which chipmakers are going to be receiving funding under the CHIPS Act. Since its creation as well as passage, the CHIPS Act has gone on to garner the U.S. more than $200 billion in terms of private investments toward semiconductor manufacturing. Financial aid from both federal as well as state governments has gone on to captivate interest among industry competitors.
A side effect of new tax breaks as well as other monetary benefits has indeed contributed to a surge when it comes to collaborative partnerships among semiconductor manufacturers. The advantages of these strategic partnerships are indeed invaluable. They could go on to prove necessary when it comes to overcoming one of the biggest issues for the electronic components sector in the coming 10 years, and that’s the labor shortage.
Reports Indicate Semiconductor Projects Could Have Billions in Subsidies
Notably, the Biden Administration is soon going to be awarding billions in subsidies to top semiconductor manufacturing firms. The Wall Street Journal goes on to report that executives anticipate this announcement to occur at President Biden’s State of the Union Address, which is scheduled for March 7th. It is worth noting that the likely recipients of these subsidies are going to be Intel and TSMC. The subsidies will help these companies complete the latest U.S. semiconductor facilities.
It is well to be noted that Intel has projects that are currently underway in Arizona, Ohio, New Mexico, and Oregon that happen to cost more than $43.5 billion. TSMC has a couple of plants in Arizona with an overall investment of $40 billion that were announced in 2023. Samsung Electronics, on the other hand, which could also be among the recipients, happens to have a $17.3 billion project in Texas. The Wall Street Journal also anticipates Micron Technology, Texas Instruments, as well as GlobalFoundries to be among the top contenders when it comes to subsidies.
It is predicted that the announcements are going to kick-start the manufacturing of advanced semiconductors when it comes to smartphones, artificial intelligence- AI applications as well as weapons systems. This comes after remarks from Gina Raimondo, the U.S. Commerce Secretary, in December last year, which stated that she would make almost a dozen funding awards when it comes to semiconductor chips in the following year. In most likelihood, this is indeed going to reshape U.S. chip production.
It is worth noting that the first award was also made public in December last year, with more than $35 million in funding for a BAE Systems facility set up in New Hampshire. Significantly, the facility is said to produce chips used in fighter planes and also happens to be a part of the $39 billion Chips for America subsidy program.
Although these economic initiatives happen to be an added boon to the United States, lingering challenges remain because of the ongoing labor shortage. Despite investments, there are some experts who worry that semiconductor manufacturing production is going to take years in order to meet objectives because of the requirement for more skilled labor.
Universities as well as semiconductor companies happen to be working together to create educational pipelines, but it could go on to take years, if not months, to properly set up. There happens to be a chance that these new subsidies will help push educational efforts to enhance the talent pool faster. If not, AI’s surging improvements can enable to bridge the gap which is left by the labor shortage.
Intel & UMC Partner for High-Growth Markets
Intel as well as the United Microelectronics Corporation- UMC recently went on to announce their collaboration in order to develop a 12nm semiconductor process platform. The novel process is going to address high-growth markets such as mobile, networking, as well as communication infrastructure. This long-term agreement is going to leverage Intel’s at-scale U.S. manufacturing capabilities and experience, alongside UMC’s extensive foundry capacity on mature nodes, so as to enable a wide portfolio.
To start with, the partnership is going to focus on Intel’s U.S.-based high-volume manufacturing plant as well as experience with FinFET transistor design. This design goes on to offer a potent mix of performance as well as power efficiency, giving both Intel and UMC an excellent springboard so as to create a product that satisfies the demand of the customer. Intel and UMC will collab on design enablement so as to support the 12nm process across electronic design automation, along with intellectual property solutions from other ecosystem partners.
The project is most likely to begin operations in 2027, with the 12nm process being developed as well as manufactured in Fabs 12, 22, and 32 at Intel’s Ocotillo Technology Fabrication site located in Arizona. Intel and UMC will prominently go on to reduce the investment required to create this new process by way of using existing equipment.
Since the announcement, Intel as well as Taiwan have gone on to share positive statements in reference to each other’s strengths.
Taiwan happens to be a critical part of the Asian as well as global semiconductor and also a broader technology ecosystem for decades, and Intel happens to be committed when it comes to partnering with innovative companies across Taiwan, like UMC, so as to help better serve international customers, said Intel Senior Vice President as well as General Manager of Intel Foundry Services, Stuart Pann. It is well to be noted that Intel’s strategic collaboration with UMC goes on to demonstrate their commitment so as to deliver technology and also manufacturing innovation throughout the global semiconductor supply chain, and happens to be yet another significant step when it comes to their goal of becoming the world’s second-largest foundry by the end of the decade.
UMC Co-President, Jason Wang, remarked that their collaboration with Intel on a U.S.-manufactured 12 nm process along with FinFET capabilities is indeed a step forward when it comes to advancing their strategy in terms of pursuing cost-efficient capacity expansion as well as technological node advancement in furthering their commitment to customers. This endeavor will enable their customers to smoothly travel through to this critical new node and also benefit from the resiliency of an added Western footprint. They are indeed excited for this strategic partnership along with Intel, which goes on to widen their addressable market and also significantly speed up their development roadmap, thereby leveraging the complementary positives of both companies.
The landmark collaboration happens to be a win-win for both companies since UMC can swiftly leverage the FinFET capacity sans the added pressure in terms of costly capital investments. For Intel, this partnership is expected to aid the firm in its goal of shifting from an integrated device manufacturer- IDM to a foundry business model. Both companies, specifically UMC, will be able to solidify their standing in the fierce competition in their respective areas.
Trendforce goes on to note that if the partnership succeeds, Intel may very well consider co-managing additional 1Xnm FinFET facilities along with UMC, thereby potentially expanding to sites such as Ireland’s Fab24 as well as Oregon’s D1B/D1C. But it goes without saying that the journey to its production start in 2027 which is kind of tentative, is not without challenges. Intel continues to face barriers as it attempts to break into the foundry sector, and UMC’s 14nm process has been in the making since 2017.
In all likelihood, Intel and UMC can go on to strengthen each other’s weak points with their individual experience as well as expertise. It will be kind of interesting to see what comes up in this new alliance in the years to come.
