Manassas was at the center of a push to juice U.S. semiconductor manufacturing this week, as Sens. Mark Warner (D-Va.) and John Cornyn (R-Texas) joined Secretary of Commerce Gina Raimondo for a tour of Micron’s plant.
The senators said increased domestic production of the electronic devices is urgent for economic and national security reasons. Along with Mayor Michelle Davis-Younger and Micron CEO Sanjay Mehrotra, Warner and Cornyn were touting their co-sponsored $52 billion CHIPS Act, for which Warner said he hopes to see funding approved in the Senate by the end of the week.
The bill would offer U.S. companies such as Micron – the fourth-largest semiconductor company in the world – funding incentives to expand their semiconductor production. According to the bill’s supporters, America produced 37% of the world’s semiconductors in 1990, but that is down to just 12% today, and a global disruption of semiconductor supply chains due to the COVID-19 pandemic is affecting other industries.
The chips are found in a myriad of consumer and industrial products, from smartphones to automobiles. Auto manufacturers have had to slow production because of the shortage. Ford CEO Jim Farley called it “perhaps the greatest supply shock” he’s seen, according to Automotive News.
“There are auto factories in America that are idle today, not because there’s not folks that want to buy American cars, but because there are shortages of semiconductors,” Warner said in Manassas on Monday.
About $39 billion of the $52 billion would jumpstart the opening of new foundries, called “fabs.” The officials toured Micron’s 175,000-square-foot fab, which the company announced a $3 billion expansion of in 2018 with the help of $70 million from the state.
The plant is the only one in the U.S. where semiconductor memory storage – known as DRAM – is manufactured, and the company says the expansion will add another 111,000 square feet of production space and 1,100 jobs to the city by 2030. Mehrotra encouraged Congress to pass the funding, which will also need approval from the House of Representatives, to help unlock further investment from companies like Micron.
Demand for the semiconductors has surged in concert with demand for electronic devices during the pandemic, but supply has not followed suit and at times has been hampered by COVID. Industry experts say the chip shortage could continue through 2021.
The fabs needed to produce the chips are extremely costly and time-consuming to stand up, according to Warner, who said he hoped that the $39 billion could be used to seed seven to 10 new facilities like Micron’s.
Raimondo said the shortage is proving how crucial the semiconductor supply chain is to the country, but manufacturing has recently been dominated by Taiwan. According to CNBC, Taiwan’s contract manufacturers generated 60% of the worldwide foundry revenue in 2020. And according to the bill’s authors, the Communist Party of China is investing $150 billion in semiconductor manufacturing to gain more control of the global supply.
“Hospitals and medical equipment rely on semiconductors. Pick up your phone, semiconductors. Do anything on a computer, semiconductors,” Raimondo said. “As we go forward – artificial intelligence, quantum computing, everything we do is built on the building blocks of semiconductors. So the supply chain of semiconductors must be secure.”
She added that any funding approved by Congress would ultimately be disbursed by the Department of Commerce, but that it wouldn’t replace private investment. Instead, she said, it would need to be paired with state and local money to “unlock” private investment.
Phase one of Micron’s new “cleanroom” facility for semiconductor memory production should be completed later this year, with increased output beginning at the end of the year and ramping up in 2022, according to Mehrotra.
“This is going to be important to meet the growing needs of semiconductors across all end market segments, certainly including automobiles as well,” he added.