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Over the past four years, the United States has witnessed a profound surge in domestic and foreign direct investment (FDI) within its semiconductor industry, driven by strategic government incentives and unprecedented demand for new technology. This growth underscores the critical role of semiconductors in global technology and highlights the United States’ ambitions to advance its resource capability, secure its supply chains, and ultimately achieve dominance in this crucial sector.
Against the backdrop of an increasingly interconnected world, semiconductors form the backbone of modern technology, powering everything from smartphones and computers to advanced defense systems and artificial intelligence. Recognizing the strategic importance of semiconductors to economic competitiveness, national security, and the ability to meet the ever-growing demand for technology, the United States has increasingly prioritized its semiconductor industry.
The United States seeks to maintain its technological edge by fostering innovation, protecting intellectual property, and attracting foreign investment. The U.S. government has strategically incentivized semiconductor investments to fortify its technological leadership and reduce dependence on foreign suppliers, particularly in the wake of the semiconductor shortages that disrupted global supply chains throughout the pandemic, when demand for technology skyrocketed. By offering incentives such as tax credits, grants, and infrastructure support, the U.S. government aims to incentivize foreign semiconductor companies to establish manufacturing facilities and research centers in the United States, strengthening the country’s semiconductor ecosystem and enhancing its competitiveness in the global market.
In 2022, President Biden signed into law the CHIPS for America Act which allocated substantial funding for semiconductor research and development, aiming to strengthen domestic chip manufacturing and innovation. These incentives have attracted significant investment from foreign semiconductor companies eager to tap into the U.S. market and contribute to its technological advancement. Taiwan Semiconductor (TSMC) Arizona, a subsidiary of TSCM, has committed to investing more than $65 billion in three greenfield leading-edge fabs in Phoenix, Arizona. TSCM will manufacture the world’s most advanced semiconductors, supporting critical technologies like AI, 5G/6G communications and high-performance computing. In April, The U.S. Commerce Department announced it had signed an agreement to award TSMC $6.6 billion in direct funding under the CHIPS act and provide an additional $5 billion in loans to secure the investment. In addition, Infineon, Bosch, and ASML have been prominent investors in the U.S. semiconductor sector.
The United States is also home to some of the largest semiconductor players, and not to be outdone by foreign competition, both Intel and Micron have made significant U.S.- based investments. Micron’s investment in New York involves a substantial capital commitment of up to $100 billion over the next 20 years to build a state-of-the-art semiconductor fabrication facility. This investment is poised to create approximately 50,000 jobs, including direct and indirect employment opportunities, significantly boosting the local economy. This initiative underscores Micron’s commitment to strengthening the U.S. semiconductor industry, enhancing domestic production capabilities, and reducing reliance on foreign suppliers. Likewise, in 2022 Intel announced its megaproject in Licking County, Ohio to be the future home for its most advanced semiconductor manufacturing facilities. Intel will invest more than $20 billion, generating more that 20,000 jobs, including direct Intel jobs earning an average of $135,000 per year, and 7,000 construction jobs over the course of the build.
Meanwhile, global competition in the semiconductor industry has intensified as nations vie for dominance in emerging technologies such as 5G, artificial intelligence, and autonomous vehicles. In 2023, the European Union enacted its own Chips Act, intended to strengthen Europe’s position in the semiconductor industry and double its global market share to 20% by 2023. China, with its ambitious Made in China 2025 initiative, has also invested substantially in semiconductor manufacturing and research, aiming to reduce its reliance on foreign technology and achieve self-sufficiency in strategic sectors. Recently, The Chinese government announced it largest-ever semiconductor state investment fund worth $47.5 billion. Unlike the United States and Europe, however, these efforts are not necessarily intended to attract FDI.
Semiconductor investments play a crucial role in driving innovation and economic growth, creating high-skilled jobs, and fostering collaboration between industry stakeholders, academic institutions, and government agencies. The United States, with its conducive business environment, robust intellectual property protection, and vibrant innovation ecosystem, remains an attractive destination for semiconductor investments, positioning the country as a hub for technological innovation and advancement.
Authored by
Michael Hirou is USA Country Manager and Sarah Urtz is Senior Research Analyst at Tractus.
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