In today’s world we rarely witness the seismic economic shifts that the semiconductor industry is experiencing. Stoked by fears that China will invade Taiwan, electronics manufacturers have realized how much of their semiconductor chip manufacturing supply chain is located in Taiwan. By some estimates, 65% of all semiconductor chips are made there. Should China invade Taiwan, almost every industry would be impacted. This would include consumer electronics, laptops and computers, the automotive industry, and national defense products, to name a few.
Many people remember the 2021 chip shortages that affected automobile inventories. While the shortage was highly visible in the media and in empty dealership parking lots, it was a relatively small disruption in comparison to what we might face on the horizon. Supply chain disruptions in other industries are all too common (e.g., baby formula, toilet paper).
In response to this threat to the U.S. economy, Congress recently passed the $280 billion CHIPS & Science Act. The act has several goals:
Strengthen the U.S. position in semiconductor research, development and manufacturing; restore U.S. leadership in semiconductor manufacturing by providing incentives; grow the country’s research and development ecosystem for microelectronics and semiconductors; and secure semiconductor supplies for critical sectors.
The intent of the act is to grow and stimulate our country’s existing semiconductor manufacturing capacity while kick-starting commercial semiconductor activity that does not yet exist.
Ultimately, Congress wants the U.S. to establish its own robust semiconductor industry so the nation will have technology independence.
On the federal level, the CHIPS Act funding will flow through the National Institute of Standards & Technology (NIST) and its Manufacturing Extension Partnership (MEP) program.
At the state level, NIST’s MEP Center is operated by Arkansas Manufacturing Solutions (AMS), which is part of the Arkansas Economic Development Commission. It is expected that federal funding for semiconductor manufacturing will flow through AMS, which can distribute funding appropriately to entities in the state. Leadership over the next few years will determine how much of this federal CHIPS funding comes to Arkansas to support our local job and economic growth.
Because it supplies lasers to support the semiconductor manufacturing industry, Power Technology and I recently hosted the Arkansas Semiconductor Business Leader Summit with the goal of organizing the key players in the state’s semiconductor industry that are taking the first steps to bring federal funds to Arkansas via the CHIPS & Science Act. By getting organized early, we, the semiconductor industry in Arkansas, hope to create high-paying jobs and a bright new future for a vital sector of Arkansas business. The summit promoted communication between semiconductor-related companies and individuals along with regulatory experts and academic leaders by having roundtable discussions about how best to accomplish our goals. The final consensus of summit participants included the need for more domestic sources for our supply chain, more domestic service providers, and for collaborative products for future CHIPS projects.
A meeting in the near future will create the next steps needed to position Arkansas’ semiconductor community to take advantage of this once-in-a-lifetime opportunity. Increasing collaboration is the most important pathway to achieving the initiative’s goal. The act awards funding based on collaborative proposals. It authorizes funding for facilities improvements, capital equipment and training. The center of global semiconductor production is rapidly changing and Arkansas should play its part. As we formalize the details of the next upcoming discussion, we invite interested parties to contact us for opportunities to participate as well.
Walter Burgess is co-CEO of laser manufacturer Power Technology Inc. of Alexander and chairman of the Industrial Advisory Committee within AMS.
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