CCU in the News
We got great coverage for our conference, The Dark Side of the Chip in Phoenix on Oct. 8th. As far as we know, it was the first conference ever to address the impact of the semiconductor industry on US workers, communities, and the environment. Here are a few TV clips (one, two, and three), and here’s a great article in Forbes about the event, written by a conference attendee.
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National News
The US Senate passed controversial legislation called the GAIN AI Act, which would force American chip manufacturers to sell their most advanced processors to domestic customers first. “Nvidia strongly opposes the legislation. The company called the proposal ‘doomer science fiction’ and argued it solves a problem that doesn’t exist. Nvidia maintains its worldwide sales don’t hurt American customers and actually help US businesses by expanding markets.” CCU does not have a position on this bill. Let us know your thoughts.
The National Science Foundation is 75 years old this year, but instead of celebrating, the agency is facing a 60% budget cut. Ouch. As you may recall, Congress never completed appropriations for the CHIPS and Science Act; the “and science” part was almost completely neglected. And the current administration has been cutting its funding savagely.
Two months ago, President Trump converted Intel’s CHIPS Act grant into an equity stake, making the US government the largest shareholder of the country’s premier chip-maker. We’ve shared a lot of commentary on this move, which was an astounding expansion of US industrial policy. Two more articles this week are worth adding to the list:
- Industrial Policy, Trump Style. An article in the Washington Monthly argues that “[t]he president’s parade of ad hoc deals with companies benefits his political allies and punishes enemies, but doesn’t enhance national greatness.”
- Another article on Trump’s “stealth nationalism” concludes that, “A president who once denounced socialist meddling and celebrated corporate freedom is pioneering a form of politicized capitalism that blends the inefficiencies of state control with the inequities of the private market.”
News from Around the Country
Arizona: Amkor broke ground on its new facility, notably not in the community of Vistancia. Vistancia neighbors (pictured here, with Elton and Diana) put up such a fight that the city did a land-swap deal to move the factory away from homes, parks, and schools. The company has also expanded its planned investment to a total of $7 billion.
A new video provides a glimpse into TSMC’s clean room. It’s basically an ad, but it’s a very cool ad. And it has a puppy and a kitten, for your viewing pleasure.
Speaking of TSMC, the company is on the verge of acquiring new land for its planned ‘gigafab cluster’ in Phoenix. CCU has been talking to residents of Stetson Valley, a North Phoenix neighborhood, who recently learned that TSMC is hoping to build a fab in their neighborhood. Neighbors are concerned the project could pave land that was previously protected as part of a Sonoran Desert Reserve, massively increase traffic through quiet streets, and bring the risk of toxic contamination.
Here’s an analysis of Intel’s factory on Chandler. “The centerpiece of the company’s comeback hopes is a multibillion-dollar facility in the Arizona desert… Intel has recently brought a string of potential customers through the plant in Chandler, Ariz., and pitched them on manufacturing their chips at Fab 52. But analysts say most chip companies want to see whether Intel can succeed in making its own computer chips before asking it to produce their chips for smartphones, artificial intelligence systems, and other technologies.”
California: Why did the industry tradeshow SEMICON West end up in Arizona this year, not California? The change was partly about Arizona’s emerging strength as a semiconductor epicenter and partly about California’s weakness. The move reflects “a weak spot for the broader state of California: its struggle to tap into the resurgence of domestic high-tech manufacturing encouraged by government incentives such as the 2022 CHIPS and Science Act. Industry representatives offered POLITICO plenty of culprits, from California’s higher energy and labor costs to its land use regulations. No matter the cause, the CHIPS Act hasn’t changed the fact that Silicon Valley is now rich in companies that develop the world’s best chips, then produce them elsewhere. Gov. Gavin Newsom and state leaders have tried to reverse the trend by offering tax credits and including semiconductor facilities in exemptions from state environmental permitting rules he signed earlier this year.”
Indiana: Months after the city council gave the project a green light, neighbors are still mad about the planned SK hynix plant, which will be adjacent to a residential neighborhood in West Lafayette. Angry residents packed a council meeting to call for a rezoning of the area to block the factory. Here are one, two, three news stories from the recent meeting.
New York: Gov. Kathy Hochul has greenlighted an underground transmission line needed to connect Micron to the Clay power station.
Texas: Texas Instruments is laying off 400 employees in Sherman and Dallas, just months after the company announced a $60 billion investment to build seven fabs in Texas and Utah.
Corporate News
Semiconductor manufacturing is cyclical, and there are signs we’re currently in a semiconductor “supercycle,” a period of sustained growth in demand, driven by the AI boom. TSMC exceeded its third quarter target, Samsung posted record profits, and other chipmakers are thriving.
TSMC and Nvidia have completed their first made-in-the-USA wafer, which will be used for Blackwell AI chips. I’m not sure what those are, but they’re making them in Phoenix now!
According to the reddit rumor-mill, another round of layoffs will hit Intel in mid-November.
Economic News
JPMorgan Chase is investing $1.5 trillion over the next ten years in the AI supply chain, including critical minerals and semiconductor production. “This massive investment signals a strategic shift from financial institutions towards national security and industrial resilience, acknowledging that the control over AI infrastructure, from data centers to the very chips that power them, is as crucial as geopolitical territorial control.”
Manufacturing and AI are supposed to be powering the country’s future. But while AI is booming, manufacturing is slumping. “You have the software and services world accelerating, and becoming almost a monomania for the culture, at the same time that manufacturing remains flat or worse,” said Mark Muro, a senior fellow at the Brookings Institution. “The AI boom is kind of papering over some other parts of the economy that aren’t going well.” The manufacturing sector is down 38,000 jobs since the start of the year.
Global Politics
There’s a new drama in the global semiconductor market, and it’s hitting automakers hard. “The Dutch government has taken control of Chinese-owned computer chipmaker Nexperia, ratcheting up tensions with Beijing as a global fight brews over technology intellectual property, especially around semiconductors. The government … has intervened in Nexperia, which manufactures chips for cars and consumer electronics, [citing] worries about the possible transfer of technology to Nexperia’s Chinese parent company, Wingtech.”
As a result, we’re in another chip-related crisis: “The semiconductor industry is experiencing its most acute geopolitical crisis since the pandemic, one that exposes the fragility underlying decades of globalized manufacturing…. The crisis began to crystallize in early October when China’s Ministry of Commerce imposed export restrictions preventing Nexperia China and its subcontractors from exporting certain finished components and sub-assemblies manufactured on Chinese soil. This retaliation came swiftly after the Dutch government invoked emergency powers to seize control of the company, citing grave governance deficiencies and threats to European economic security. What started as a governance dispute between The Hague and Nexperia’s Chinese parent company, Wingtech Technology, has metastasized into a production and supply chain emergency that touches virtually every automotive manufacturer on both sides of the Atlantic.”
Because Nexperia makes chips for cars, the crisis could rock the auto industry. Car makers are panicking, particularly European carmakers. Although apparently a semiconductor shortage is just one of many supply chain problems that are impacting the automobile industry.
In other news, China plans to tighten export of rare earth minerals, which are used in semiconductors, batteries, EVs, solar cells, and pretty much all the technology we rely on. China accounts for 60–70% of all rare earth mining and more than 90% of rare earths refining. In response, Trump threatened 100% tariffs on everything. The US is also exploring Australia as an alternative source of the minerals.
We’re Also Reading
More on the US-China trade war:
- A brainy article in Phenomenal World about the US, China, and chips.
- Another article (from a different political perspective) argues that China is winning the US-China trade war.
- Despite all the export controls, China continues to buy chip-making technology.
Thank you! See you next time!
Judith
