To secure the supply chain, the United States needs semiconductor chip sites

Increasing U.S. semiconductor production remains a priority for experts who are focused on securing U.S. supply chains for critical technologies and increasing competition with China.

China produces more than a third of the critical components imported into the United States for building technology goods, said John VerWey, national security adviser for East Asia at Pacific Northwest National Laboratory. VerWey was speaking at a hearing on U.S.-China competition in global supply chains hosted by the U.S. China Economic and Security Review Commission.

“Chinese companies maintain monopolies or near-monopolies in many critical segments of the technology supply chain,” VerWey said during the hearing. “Especially in commodities, mining, refining and processing, where in some cases US dependency is 100 percent.”

Semiconductor production has attracted the most attention in the United States and Europe. China is becoming one of the world’s largest producers of semiconductor chips. In the United States, proposed legislation such as the CHIPS Act includes $52 million to kick-start semiconductor manufacturing in the United States

Securing the semiconductor supply chain and becoming more competitive with China means building more chip manufacturing facilities in the United States and seeing what it would take to convince companies like Apple and Google to buy chips. US-made chips, VerWey said.

Chinese companies maintain monopolies or near-monopolies in many critical segments of the technology supply chain.

Jean VerWeyNational Security Advisor for East Asia, Pacific Northwest National Laboratory

Invest in semiconductor manufacturing facilities

Building semiconductor manufacturing facilities in the United States would help meet the growing demand for chips needed by many industries, including smartphone, computer, cloud and auto makers.

Such a facility would also serve as an attraction for other companies supplying materials and, subsequently, labor.

“When you build a state-of-the-art manufacturing facility, you don’t just get a state-of-the-art manufacturing facility,” VerWey said. “You get the ecosystem of chemical vendors, material vendors, mask vendors, equipment vendors that populate that factory. Plus, you also get a workforce that goes into that factory and the high-skilled jobs that come with it.”

A crucial part of the success of U.S.-based chip facilities would be working with chip buyers, said Jan-Peter Kleinhans, head of technology and geopolitics at Stiftung Neue Verantwortung, a German think tank at non-profit. Ultimately, Kleinhans said it comes down to chip manufacturing costs for most companies.

The big question is simple, Kleinhans said. “What is the cost difference between manufacturing in the United States and manufacturing in Taiwan that you could live with as an end customer to make a purchase decision in favor of the new factory in the United States or Europe? »

Challenges in extracting raw materials for chips

The United States could also consider mining raw materials for chips, which would improve supply chain resilience, VerWey said.

However, establishing a mine site can take years due to regulatory requirements from agencies such as the Environmental Protection Agency, and mine sites can often experience environmental issues that prevent them from being put online.

“The United States has abundant raw material resources,” VerWey said. “But increasing domestic mining and refining capacity is long lead times, costly and comes with trade-offs.”

China remains a leader in extracting raw materials, rare-earth elements, used for semiconductors, said Kristin Vekasi, associate professor at the School of Policy and International Affairs at the University of Maine.

The growing interest in green technologies is also increasing the demand for raw materials. Solar panels, for example, rely on the raw material silicon, which is also used to make semiconductor chips.

“It is likely that private companies will have to rely on Chinese expertise to develop a true US-based rare earth industry,” she said. “The United States should recognize China’s technical leadership in this sector, be pragmatic, and not prohibit private sector cooperation with Chinese business entities in order to be eligible for funding opportunities.”

Makenzie Holland is a news writer covering big tech and federal regulation. Before joining TechTarget, she was a generalist journalist for the Wilmington StarNews and crime and education reporter Wabash Plain Dealer.