The Chips Are Down

On Tuesday, Joe Biden signed the CHIPS and Science Act into law – a $280 billion dollar support package that includes $52 billion in funding to boost U.S semiconductor manufacturing.

Back in 2000, the U.S accounted for 19% of global semiconductor production. Thanks to heavy investment (mainly by the Taiwanese and Koreans), this has dropped to 12%. And yet the U.S accounts for 24% of global semiconductor demand.

This seems to be an awesome opportunity that perhaps wasn’t fully appreciated until the COVID induced global semiconductor shortage. Semiconductor manufacturing is highly sophisticated. It requires constant and rapid innovation, very large capital investment, cutting edge equipment, and a highly skilled workforce. These are all things that the U.S has. It also has Intel, and a good complement of other businesses with expertise in this space.

Just to finish things off, the annual average growth of the semiconductor industry over the past 20 years is around 13%. This is a great horse to back. I hope it succeeds.