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Microchips, along with their parts and components have become a huge part of modern life. They’re used in computers, machinery, phones, and many other electronics and appliances we use on a daily basis. Of course, various metal parts and components are integral to the manufacturing of these microchips. How has the microchip industry been impacted by current global events? Moreover, what does the future hold for US microchip supplies?
Microchips in the Automotive Industry
A recent article noted how a global surge in automobile prices caused a huge spike in microchip demand. This proved one major catalyst for worldwide microchip shortages. With advances in automotive technology, especially in the growth of EV vehicles, this assumption doesn’t sound farfetched.
However, technological advancements continue to happen all the time. As a result, microchips and commodities like silicon, which go into manufacturing them, will continue to grow in demand.
US and China Race Taiwan with Microchip Technology
Currently, Taiwan remains one of the world’s top manufacturers of microchips and semiconductors. However, US manufacturers are trying to catch up to Taiwan’s microchip production rate. That said, currently the US produces only about 12% of the world’s microchip supplies. These valuable components are incredibly difficult to manufacture, not just for the US but for most nations. Computer chips and semiconductors consist of numerous delicate layers of silicon with labyrinths of patterns between them. Because of this, manufacturing these crucial parts is not only time consuming but also expensive.
Taiwan manages to produce an abundance of microchips partially in thanks to Taiwan Semiconductor Manufacturing Co Ltd., one of the world’s top chip producers. The country also excels at semiconductor manufacturing technologies, making it a major player in the global microchip industry.
Some speculate that this makes Taiwan a target for China, as many Chinese microchip parts come from Taiwan. Therefore, if any type of conflict were to occur involving Taiwan it could lead to immediate global ramifications in the microchip industry.
US Making Strides
Recently, President Biden signed a microchip bill aimed at bolstering the US microchip industry. After all, since the early 1990’s, the US’ microchip and semiconductor manufacturing industries have been cut in half. Difficulties with manufacturing, as noted above, are a huge contributor to this. That’s why the goal of this new bill is to jump-start the US’ semiconductor manufacturing efforts once again.
Yet another layer of incentive can be found in the new bill. It states that companies who invest in microchip manufacturing facilities will receive a 25% tax credit. Despite the good news, moving semiconductor manufacturing into the US will come with challenges. For instance, microchip manufacturing, like many industries saw a significant slowdown with the pandemic. This caused a temporary halt in technological advancements. Of course, supply chain shortages have not helped.
Still, issues like this are ones that the new bill strives to minimize. Hopefully, the new bill will ease microchip shortages and aid the US in catching up to Taiwan in the new race for microchip manufacturing dominance.
