Joe Biden will sign a law to boost production in the United States

Two years of tough negotiations, the search for compromises and heated exchanges have finally paid off. After getting the green light from the Senate and the House of Representatives last week, the Chips and Science Act now only awaits the signature of US President Joe Biden to enter into force.

If the road was long to allow this law to see the light of day, the result is anything but negligible, and marks the return with great fanfare of a proactive industrial policy in the United States. 280 billion will be invested, including 52.7 billion which will be devoted to supporting the production of semiconductors on American soil and research into this technology with the help of subsidies. Another 24 billion will be spent on tax incentives for the same purpose. The rest of the 280 billion must be invested in research around critical technologies, the development of clean energies, nuclear physics, and to allow NASA to prepare future missions to the Moon and Mars.

Semiconductor factories are already springing up like mushrooms

The effects of the law have already been felt even before it comes into force, as several semiconductor manufacturers, including Intel, Taiwan Semiconductor Manufacturing Co. (TSMC) and GlobalFoundries have started building foundries in the States. States expecting to benefit from the subsidies once the law is passed.

Intel CEO Pat Gelsinger, in office since January 2021, has made this goal one of his priorities. After announcing its intention to invest 20 billion in two production plants in Arizona last year, the company recently doubled down with a similar investment dedicated to the opening of two other factories in Ohio, in the heart of the Rust Belt.

Microprocessors: how the United States wants to get out of the Chinese rut

The pandemic has shown that the industry today is far too geographically concentrated (80% of the chips used in the world are produced in Asia), with the risks that entails. We want a global industry that is more resilient, and we believe that the best way to achieve this is to build strong local industries, so that production capacities are better distributed “, he recently confided to La Tribune.

It is also on Arizona that the Taiwanese giant TSMC has set its sights to build its first semiconductor production plant on American soil, in which it has invested 12 billion dollars. GlobalFoundries, another American giant in the sector, will for its part spend between 6 and 8 billion to set up a new factory in Saratoga County, New York State.

A bipartisan effort to counter the Chinese dragon

In the Senate as in the House of Representatives, the law received the support of several elected Republicans, including the leader of the Republican minority in the Senate Mitch McConnell. A rather rare bipartisan agreement in a very divided American political landscape. If they are at odds with each other on internal affairs in the country, the two parties however fall much more easily in agreement when it comes to foreign policy.

However, the desire to relocate the production of semiconductors on national soil is mainly motivated by the rise of China and the risk of an invasion of Taiwan by the Middle Kingdom. ” It’s no exaggeration to say that semiconductors are the alpha and omega of our technological competition with China. “, thus affirmed at the end of July the number 2 of the Pentagon, Kathleen Hicks.

The United States maintains a dominant position in high-end semiconductor design, thanks to giants like Intel, Qualcomm and Nvidia. On the other hand, in terms of physically producing chips, the country has seen its position weaken in favor of Southeast Asia: only 12% of the world’s microprocessors are manufactured in the United States, against 37% in 1990. A decline that the Chips & Science Act aims to stem.

Its defenders have thus pointed to the major subsidy policies adopted by the countries of Southeast Asia, in particular Taiwan and South Korea, which have enabled them to generate national champions, such as the Taiwanese TSMC, which alone melts 60 % of microprocessors used worldwide. During her recent visit to Taiwan, which greatly angered Chinese leaders and led the country to carry out major military maneuvers near the island, House Speaker Nancy Pelosi took care to meet with the leaders of this company, which the United States is trying to convince to decentralize its production in the face of growing threats from China. Beijing has never recognized Taiwan’s sovereignty, and President Xi Jinping recently pledged the ” reunification with the island in one of his speeches.

Industry’s reliance on Taiwan worries everyone

It is essential to reduce the dependence of the world economy on Taiwan, which is currently under threat from China. TSMC led the way by building a foundry in Phoenix, Arizona. They also want to increase their production activities in Japan says Russ Shaw, founder of Global Tech Advocates, an international network of new technology players.

If we add the context of the shortage, we understand that semiconductors have become a strategic issue for the United States, but also the United Kingdom and Europe. The United States quickly mobilized the public and private sectors, with Samsung announcing the construction of a new factory in Texas, Intel investing in Ohio, and now the Chips & Science Act which is about to be be signed. The European Union and the United Kingdom are setting up similar efforts.

This is all part of an important long-term strategy that I hope these countries will maintain. In a turbulent geopolitical context, we need to ensure that there is a competitive environment to minimize risk. Concentrating production in a single country is not sustainable. »