U.S. Semiconductor Production Continues To Grow Thanks To CHIPS Act

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Introduction

The U.S. government has just announced a $1.5B grant to GlobalFoundries Inc. ((NASDAQ:GFS) to bolster semiconductor production and fortify the supply chain in the U.S. under the auspices of The CHIPS for America Act. In addition, the government will be providing an additional $1.6 billion in federal loans which are projected to triple the company’s production capacity in its existing facility in Malta, New York over a span of 10 enabling it to fulfil the demands of its contract with General Motors, ensuring dedicated chip production for automotive purposes. That should have a positive impact on the company's stock price and munKNEE will track its stock price going forward. 


The CHIPS for America Act

The U.S. share of the global semiconductor manufacturing capacity has plummeted from 37% in 1990 to 12% in 2022, according to a report by Semiconductor Industry Association, “mostly because other countries’ governments have invested ambitiously in chip manufacturing incentives and the U.S. government has not”. The remaining 88% of chips are manufactured in Asia and that dependence on foreign chip sources became glaringly evident in the early stages of the pandemic when automakers and other industries faced disruptions or closures due to a shortage of vital chips. That resulted in the passage of the CHIPS for America Act which was passed in August 2022 as part of the current National Defense Authorization Act and provides $52.7 billion to revive the U.S. semiconductor industry, including $39 billion in incentives to expand or build manufacturing facilities.


What Are Semiconductors?

Semiconductors are built on semiconducting material -  material with good electrical conductivity between metals and insulators that have poor conductivity - with the extent of conductivity controlled by adding small amounts of other elements. They are manufactured in special manufacturing facilities Semiconductor Fabrication Plants - called "fabs", for short - and are used in the manufacture of various kinds of electronic devices, including diodes, transistors, and integrated circuits. The chips, themselves, are complex structures made of millions or even billions of transistors and other components with up to 500 steps to develop a wafer. 


The Top 8 Current U.S. Semiconductor Manufacturers 

  1. Intel Corp. (INTC) manufactures processors, systems and devices, chipsets, wireless products and other computer system items and has semiconductor production facilities in Hillboro, Oregon; Santa Clara, California; and 2 in Rio Rancho, New Mexico (the $3.5B Fab 9 factory for the manufacturing of advanced semiconductor packaging technologies opened in January, 2024). 
  2. L3Harris Technologies Inc. (LHX) focuses on semiconductors for aerospace and military use and its ISR Systems plant operates in Greenville, Texas.
  3. QUALCOMM Inc. (QCOM) is located in San Diego, California and focus on quality communications products. QUALCOMM now runs the largest satellite-based commercial mobile system for the transportation sector.
  4. Amkor Technology Inc. (AMKR) is located in Tempe, Arizona and focuses on automotive semiconductor innovations such as LIDAR sensors that provide safe, effective autonomous driving.
  5. NXP Semiconductors USA Inc. (NXPI) is situated in Austin, Texas and works in the automotive, mobile communications, infrastructure and industrial technology sectors.
  6. GlobalFoundries Inc. (GFS) has three fabs located in Hopewell Junction, N.Y., Malta, N.Y., and Essex Junction, Vermont and is one of only a few U.S. companies that can fill large-scale semiconductor orders.
  7. Samsung Austin Semiconductor LLC (SSNLF) has a fab facility located in Austin, Texas.
  8. Enphase Energy (ENPH), located in Petaluma, California, creates semiconductors for the solar industry.


Planned Future U.S. Semiconductor Manufacturing Facilities

  1. Micron Technology (MU) plans to invest $40 billion through the end of the decade to build leading-edge memory manufacturing in multiple phases in the U.S. and to that end broke ground on a $15B leading-edge memory manufacturing fab in Boise, Idaho, in September, 2022, which will come online in phases starting in 2025. Ultimately, the cleanroom space will reach 600,000 square feet — the size of approximately 10 U.S. football fields - and create 2,000 direct Micron jobs. Micron also plans to spend $20 billion to build a fabrication plant in Clay, New York. about 15 miles from Syracuse, (and possibly up to $100 billion over 20 years to expand it) which will be the size of 40 U.S. football fields and is expected to provide close to 50,000 jobs for the region, including “9,000 high paying Micron jobs.” the largest ever U.S. semiconductor factory which, once completed, is expected to drastically increase the domestic supply of memory chips.
  2. Taiwan Semiconductor Manufacturing Company (TSMC) intends to build and operate an advanced semiconductor fab in Arizona which will utilize TSMC’s 5-nanometer technology for semiconductor wafer fabrication, have a 20,000 semiconductor wafer per month capacity, create over 1,600 high-tech professional jobs directly, and thousands of indirect jobs in the semiconductor ecosystem. Construction is planned to start in 2024 with total spending of approximately US$12 billion by 2029. It already has design centers in both Austin, Texas and San Jose, California, and currently operates a fab in Camas, Washington.
  3. Samsung (SSNLF) plans to build a new semiconductor manufacturing facility in Taylor, Texas, about 15 miles southwest of its current plant in Austin, at an estimated cost of $17 billion with the 5 million square meter facility being operational in the second half of 2024. The new facility is expected to create over 2,000 high-tech jobs directly and thousands of related jobs once the new facility is in full operation. 
  4. Intel Corporation (INTC) began construction on Friday, Sept. 9, 2022 of two new leading-edge chip factories in Licking County, Ohio, with an initial investment of a $20 billion which will eventually create 3,000 Intel jobs. 


Conclusion

GlobalFoundries Inc. (Nasdaq: GFS) has shown considerable weakness in the past 12 months, DOWN 21%, and is DOWN 10% YTD but its stock bounced 2.1% today on the CHIP Act grant announcement. It will be followed closely by munKNEE. 


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Disclosure: None

This article has been composed with the exclusive application of the human intelligence (HI) of the author. No artificial intelligence (AI) technology has been deployed. ...

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Frank Underwood 1 month ago Member's comment

U.S. layoffs continue to grow as well.