Snapshot of US-based Chip Manufacturing’s Continuing Decline

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November 3, 2020

The shrinking of U.S-based chip manufacturing is hardly a new concern. It’s been happening for decades and is again drawing U.S. government attention to potential efforts for reversing the trend. A report in today’s Wall Street Journal provides a brief snapshot of the current downward trajectory and suggests it won’t end soon. As of 2019, according to the article, U.S. companies still had the lion’s share of chip sales at around 47 percent.

Writers Asa Fitch and Luis Santiago report (Why Fewer Chips Say ‘Made in the U.S.A.’), “In 1990, the U.S. and Europe produced more than three-quarters of the world’s semiconductors. Now, they produce less than a quarter. Japan, South Korea, Taiwan and China have risen to squeeze out the U.S. and Europe. And China is on pace to become the world’s largest chip producer by 2030.

“The epicenter of chip production shifted partly because governments outside the U.S. offered often hefty financial incentives for factory construction to build up domestic industries. Chip companies also have been attracted by growing networks of suppliers outside of the U.S., and an expanding workforce of skilled engineers capable of operating expensive manufacturing machinery.”

As duly noted in the article, the largest U.S. chip-maker Intel “does much of its manufacturing in the U.S., although it too has opened factories in places like Ireland, Israel and China. Other big U.S. chip companies, though, contract out all their manufacturing to Asian producers such as Taiwan Semiconductor Manufacturing.”

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