U.S. Takes Strategic Step to Onshore Electronics Manufacturing

National defense bill incentivizes establishment and expansion of leading-edge foundries

4 min read
hands holding semiconductor
Photo: iStockphoto

Late last week, the U.S. Congress passed the annual policy law that guides the U.S. Defense Department. Tucked away inside the National Defense Authorization Act of 2021 (NDAA) are provisions that supporters hope will lead to a resurgence in chip manufacturing in the United States. The provisions include authorization for what could be billions of dollars of financial incentives for construction or modernization of facilities “relating to the fabrication, assembly, testing, advanced packaging, or advanced research and development of semiconductors.”

 

The microelectronics incentives in the law originate out of U.S. officials’ concerns about China’s rapidly growing share of the global chipmaking industry and from the United States’ shrinking stake. The legislation frames that as an issue of U.S. national security.

Although China does not hold a technological lead in chipmaking, its geographic proximity to those who do worries some in the United States. Today, foundries using the most advanced manufacturing processes (currently the 5-nanometer node) are operated by Samsung in South Korea and by Taiwan Semiconductor Manufacturing Company (TSMC) in Taiwan and nowhere else.

Both companies provide foundry services, manufacturing chips for U.S.-based tech giants like NvidiaAMDGoogleFacebook, and Qualcomm. For years, Intel was their match and more in terms of manufacturing technology, but the company has struggled to move to new processes.

Admittedly, there are already some moves toward state-of-the-art foundry construction in the United States even in the absence of the NDAA. TSMC announced in May that it planned to spend up to $12 billion over nine years on a new 5-nanometer fab in Arizona. The TSMC board of directors took the first step in November when they approved $3.5 billion to establish a wholly-owned subsidiary in the state.

But the Semiconductor Industry Association, the U.S. trade group, says government incentives will accelerate construction. The SIA calculates that a $20-billion incentive program over 10 years would yield 14 new fabs and attract $174 billion in investment versus 9 fabs and $69 billion without the federal incentives. A $50-billion program would yield 19 fabs and attract $279 billion.

The NDAA specifies a cap of $3-billion per project unless Congress and the President agree to more, but how much money actually gets spent in total on microelectronics capacity will depend on separate “appropriations” bills.

“The next step is for leaders in Washington to fully fund the NDAA’s domestic chip manufacturing incentives and research initiatives,” said Bob Bruggeworth, chair of SIA and president, CEO, and director of RF-chipmaker Qorvo, in a press release.

Getting the NDAA’s microelectronics and other technology provisions funded will be one of IEEE USA’s top priorities in 2021, says the organization’s director of government relations, Russell T. Harrison.

Beyond financial incentives, the NDAA also authorizes microelectronics-related R&D, development of a “provably secure” microelectronics supply chain, the creation of a National Semiconductor Research Technology Center to help move new technology into industrial facilities, and establishment of committees to create strategies toward adding capacity at the cutting edge. It also authorizes quantum computing and artificial intelligence initiatives.

The NDAA “has a lot of provisions in it that are very good for IEEE members,” says Harrison.

The semiconductor strategy and investment portion of the law began as separate bills in the House of Representatives and the Senate. In the Senate, it was called the American Foundries Act of 2020, and was introduced in July. The act called for $15 billion for state-of-the-art construction or modernization and $5 billion in R&D spending, including $2 billion for the Defense Advanced Projects Agency’s Electronics Resurgence Initiative. In the House, the bill was called the CHIPS for America Act. It was introduced in June and offered similar levels of R&D.

Some in industry objected to early conceptions of the legislation, believing them to be too narrowly focused on cutting-edge silicon CMOS. Industry lobbied Congress to make the law more inclusive—potentially allowing for expansion of facilities like SkyWater Technology’s 200-mm fab in Bloomington, Minn.

The language in later versions of the bill signals that the government “still wants to pursue advanced nodes but that they understand that we have an existing manufacturing capability in the U.S. that needs support and can still play a big role in making us competitive,” says John Cooney, director of strategic government relations at Skywater.

Realizing that little legislating was likely to happen in an election year, supporters chose to try to fold the microelectronics language into the NDAA, which is considered a must-pass bill and had a 59-year bipartisan streak going into December. President Trump vetoed the NDAA last month, but Congress quickly overrode the veto at the start of January.

“What we’ve seen increasingly over the last nine months, is that there is a bicameral, bipartisan consensus building in Congress that the United States needs to do more to promote technology and technology research [domestically],” says Harrison.

“All of this is a huge step in the right direction, and we’re really excited about it,” says Skywater’s Cooney. “But it is just the first step to be competitive.”

The U.S. move is just one among a series of maneuvers taking place globally as countries and regions seek to build up or regain chipmaking capabilities. China has been on an investment streak through its Made in China 2025 plan. In December, Belgium, France, Germany, and 15 other European Union nations agreed to jointly bolster Europe’s semiconductor industry, including moving toward 2-nanometer node production. The money for this would come from the 145-billion-euro portion of the EU’s pandemic recovery fund set aside for “digital transition.”

This post was corrected on 7 January to further clarify that the law provides authorization not funding.

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Two Startups Are Bringing Fiber to the Processor

Avicena’s blue microLEDs are the dark horse in a race with Ayar Labs’ laser-based system

5 min read
Diffuse blue light shines from a patterned surface through a ring. A blue cable leads away from it.

Avicena’s microLED chiplets could one day link all the CPUs in a computer cluster together.

Avicena

If a CPU in Seoul sends a byte of data to a processor in Prague, the information covers most of the distance as light, zipping along with no resistance. But put both those processors on the same motherboard, and they’ll need to communicate over energy-sapping copper, which slow the communication speeds possible within computers. Two Silicon Valley startups, Avicena and Ayar Labs, are doing something about that longstanding limit. If they succeed in their attempts to finally bring optical fiber all the way to the processor, it might not just accelerate computing—it might also remake it.

Both companies are developing fiber-connected chiplets, small chips meant to share a high-bandwidth connection with CPUs and other data-hungry silicon in a shared package. They are each ramping up production in 2023, though it may be a couple of years before we see a computer on the market with either product.

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