US to boost Chip Manufacturing, reduce dependency on China

The US want to upgrade its semiconductor manufacturing facilities, so that dependence on China for semiconductors is reduced.

It will also help the US to make progress in automated vehicles and artificial intelligence space.

The US has earmarked US$52 billion as subsidies for US chip manufacturing and US$100 billion of science and technology support.

Currently, most of the advanced semiconductors in the US is procured from Taiwan, which is seeing an increase in threats from  China.

TSMC in 2020 began setting up a US$40 billion semiconductor fabrication plant in the US, and around 40 suppliers plan to open facilities to support the fabrication plants.

Apple is TSMC’s largest customer and is expected to switch to some sourcing to US-manufactured semiconductors.

Many Chinese companies will lose business and access to technology if the US pushes the implementation hard.

Large chip makers might shift base selectively to keep a tab on cost implications as China has cheaper labour costs.

Consumer brands that are heavy users of advanced semiconductors might face cost and supply chain issues.