Commentary: US still lagging in delivering on global chip manufacturer ambitions

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Chang’s main point is that US manufacturing expertise has been eroded over the last 40 years, making it unlikely the country will be able to match its Asian competitors.

That was one of the “ugly surprises” for TSMC when it set up its first US plant a quarter of a century ago, the company’s founder said. Even now, after many years of improvements, chips from its US plant cost 50 per cent more than those produced in Taiwan.

Until recently, these weren’t issues that raised too much concern in Washington or Silicon Valley. For years, US chip companies have been happy to focus their efforts on those parts of the complex global industry that require the least capital investment and promise the highest profit margins.

The result has been a strong global position in areas like chip design (through companies like Nvidia and Qualcomm), chip manufacturing equipment (Applied Materials and Lam Research) and the complex software needed to design chips (Cadence and Synopsys).

CHINA’S CHIP DESIGN COMPANIES CAN MATCH SOME OF AMERICA’S BEST

Two things have made this strategy look less tenable. The first has been the threat to national and economic security from the overconcentration in Asia of chip manufacturing. That dependency has been brought home by the post-pandemic supply chain crisis. If China’s designs on Taiwan tipped over into military conflict, today’s supply crisis would pale into insignificance.

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