US to strengthen domestic semiconductor manufacturing after global shortages during pandemic

On the fragmented supply chain: “The life cycle of a chip is really complex. So there are people that design the chips, and then typically, the people that design the chips are different than the ones that end up manufacturing the chips, and that’s due to a number of reasons. But the supply chain is very fragmented for chips. So one group designs them and then another group might manufacture them and then other people might then assemble them and package them and test them, and so these chips go all across the United States, all across the world, before they end up in the things like our smartphones and laptops and whatnot.

On factors that led to the chip shortage: “When the pandemic happened and all the lockdowns started, there was a spike in the demand for chips and the demand was already going up for chips before the lockdowns occurred. And so that’s an important part of this. Part of the story is that things like electric vehicles and the Internet of Things was already causing an increase in demand for these chips. And then, when everybody had to work from home, the demand just spiked from there, which led to some shortages are things like automotive and pretty much all across the board for chips.

On the CHIPS and Science Act: “The CHIPS Act that passed last year was sort of an answer to some of these questions about bringing back some of the manufacturing and other parts of the supply chain domestically here in the States. We only produce, in terms of the manufacturing side of things, about 12% of the world’s chips, even though we demand anywhere between a quarter and a third depending on who you talk to. So that imbalance means that we are in some sense vulnerable or sort of at the mercy of the supply chain.”