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A semiconductor factory may or may not massively expand its operations to San Antonio. It depends on Washington.
Perhaps Tower Semiconductor’s West Side plan to create a new 8-inch chip factory would be welcomed by many: starving semiconductor manufacturers; the Ministry of Defense and its subcontractors who rely on chips manufactured abroad; and anyone who wants to see more well-paying high-tech manufacturing jobs in San Antonio.
But there is a problem. Building or expanding a semiconductor plant in the United States is much more expensive than overseas.
What could tip the scales towards building the plant is a new federal initiative to bring semiconductor manufacturing back to the United States, the company’s chief executive said.
CEO Russell Ellwanger launched the prospect to reporters at a panel discussion Tuesday morning at his company’s San Antonio campus, where Texas lawmakers and local manufacturers gathered to voice their support for the CHIPS Act.
The CHIPS Act – short for Creating Useful Incentives for Semiconductor Production – was led by U.S. Senator John Cornyn (R-Texas) in the Senate and Representative Michael McCaul (R-Austin) in the House, who both spoke at the roundtable. . The law creates grant programs, incentives, research centers, and other initiatives to supercharge semiconductor manufacturing in the United States. The law was enacted last year, but still lacks essential funds.
The House has so far failed to act on a bill passed by the Senate in early June that would provide $ 52 billion in program funding.
Manufacturing executives at the roundtable speaking in support of the legislation included Toyota Manufacturing Texas President Kevin Voelkel, Boeing VP of Supply Chain William Ampofo and Director of Broadcom Government Relations, Robert Hoffman.
The semiconductor shortage, which worsened towards the start of the year, has been among the most widespread and longest lasting supply chain disruptions in recent memory. Among the most publicized victims is the automotive industry, which in recent years has become heavily dependent on small electronic components.
Toyota Texas’ Kevin Voelkel said that something as simple as a tail light – which used to be just a simple 12-volt bulb – is now an assembly of LEDs requiring microprocessors to function. The Tundra, built at Toyota’s San Antonio plant, uses “nearly 80 percent more electronic components than its previous generations,” he said.
“As vehicles become more and more connected, autonomous, shared and electrified, this problem will only intensify for all automakers,” he said, predicting that the shortage would continue into the next year. .
Boeing, which has major operations in San Antonio and is a major contractor for the Department of Defense, also wants funding for the CHIPS Act approved. Ampofo said the pandemic caused shockwaves that forced a review of its supply chain. “We are quite indebted to some of these international sources,†he said.
Interruptions to global supply lines have extended delivery times for some critical parts from four months to one year. But if the company is to develop its national capabilities, that requires a “fairly large” investment, he said. “There is help that is going to be needed,†he said.
Building or expanding a semiconductor plant in the United States costs 30% more than doing it in other countries, said Jerry Strickland, executive director of the FABSS Texas Coalition, a group of semiconductor manufacturing companies. conductors.
Beyond the business case for domestic semiconductor productions, lawmakers have also emphasized the national security argument. The CHIPS law has been adopted last summer as part of the national defense budget.
Taiwan produces the overwhelming majority of the world’s semiconductors, which are the building blocks of everything from iPhones to F-35s. But the island nation is watched with greed by a resurgent China.
“We have to find a way to decouple these supply chains,” McCaul said, describing how he stressed to White House officials the need to create chips in areas “not threatened by the Chinese Communist Party.”
Cornyn and McCaul said they were confident the fundraising bill, called the U.S. Innovation and Competition Act of 2021, would be passed by the House because of its bipartisan support.
“But every day it’s not done makes me a little more anxious,†said Cornyn.
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