National News
Apparently, the administration is considering taking equity shares in quantum computing companies, as it did with Intel, using CHIPS and Science Act money. In case you were wondering, here is CCU’s position on the Intel equity stake.
As you may recall, the administration has endorsed a tariff policy that would require companies to manufacture in the United States as many chips as they import. Any company importing more than it produces domestically could face tariffs as high as 100%. (Not clear how this week’s trade negotiations with China would influence this policy proposal – see more below.) Called the “chip for chip” tariff policy or the 1:1 chip production rule, this idea is controversial.
The progressive Coalition for a Prosperous America supports the “chip for chip” idea. The group recently released a report “detailing how decades of offshoring have eroded America’s once-dominant semiconductor manufacturing base. The report, titled America’s Chip-for-Chip Tariff Policy: The Urgent Fight to Reclaim Industrial Independence Before It’s Too Late, finds that the United States now produces only 10 percent of the world’s chips—and almost none of the most advanced ones—while China has captured the majority of global capacity for legacy chips, the mature semiconductors essential to cars, medical devices, and industrial equipment.”
In other news, it turns out that Micron donated to Trump’s new ballroom.
News from Around the Country
Arizona: In the wake of SEMICON West, the huge industry trade show that moved from the San Francisco Bay Area to Phoenix this year for the first time ever, everyone is once again haling Phoenix as a semiconductor hub. Here’s another article singing the same tune.
Corporate News
How are chips made? Fox news goes inside GlobalFoundries in Malta, NY to find out.
Intel finally posted a profit! It seems like the company is bouncing back, after years of decline.
We don’t talk much about Nvidia, because they don’t manufacture chips (they design them), but it’s probably worth noting that this week Nvidia became the first $5 trillion company in history.
A startup called Substrate promises to make chips using a particle accelerator in the photolithography stage, a rival to ASML.
There’s a new book out on TSMC. It seems like it’s kind of a love letter to the company. The author argues that Taiwan’s success in semiconductor development didn’t steal US jobs; it helped create them.
Economic News
Last week there were news reports of a semiconductor “supercycle.” This week, the chip recovery is slowing, or at least that’s what Texas Instruments says.
Remember the crisis that began earlier this month when the Dutch government seized the chip-maker Nexperia? (Nexperia has headquarters in the Netherlands but is a subsidiary of Wingtech Technology, a Shanghai-listed company partially owned by the Chinese government.) Things are only getting worse. Nexperia makes chips used in cars, so the automotive sector is reeling. (Bear in mind that most of the articles below were written before the latest agreement between China and the US, so some things may be in flux.)
- Is an auto chip shortage coming? “Automotive supply chains rely on a steady flow of low-cost, high-volume chips. These are the ‘commodity semiconductors’ that keep vehicles running smoothly, and they don’t have many substitutes. As one analyst told the Journal, ‘It’s not the fancy chips that will stop you—it’s the fifty-cent one you can’t replace.’”
- American auto plants may shut down within weeks.
- European car-makers worry they’re next. EU carmakers are apparently ‘days away’ from halting work as the chip war with China escalates and the semiconductor shortage accelerates among German car-makers. The automotive parts manufacturer Bosch is preparing for furloughs and cutbacks.
Global Politics
This week, Pres. Trump is negotiating with China’s Xi Jinping, and there’s a lot of implications for semiconductors. The two have reportedly agreed on a one-year tariff truce that could ease tensions between the two nations. They also apparently agreed to limit tariffs driven by the “tit-for-tat” escalations, and Trump agreed to halve a 20 percent import duty placed on China. Crucially for the computing industry, Trump claims China has agreed to suspend the crackdown on rare earth exports for a year.
More on China’s increasing technological and economic dominance:
- Most South Korean manufacturers now believe that China is ahead.
- A technological breakthrough in China that I won’t pretend to understand suggests that the country is innovating its way beyond our export controls.
- Here’s how China came to dominate the critical minerals field.
- China seeks self-reliance in semiconductors and AI in five years.
Environmental News
Industry says fluoropolymers (a solid, non-soluble cousin of the toxic “forever chemicals” called PFAS) are critical to America’s AI future. “Behind the scenes, a lesser-known technology is quietly enabling the infrastructure that powers AI — fluoropolymers. These high-performance materials are essential to the operation, reliability, and scalability of AI data centers. Without them, the very foundation of America’s AI industry would be at risk.”
Speaking of which, here’s a one-hour lecture on PFAS in semiconductor production given at MIT by the dude who manages environmental solutions for the semiconductor supply chain company Edwards Vacuum.
I learned long ago from my colleague Harry Manin at the Sierra Club that solar power doesn’t just require semiconductors: solar cells actually are semiconductors. (Mind = blown, right?) Here’s an article that explains this crazy fact!
Citing the importance of copper to semiconductors, the president has issued an executive order postponing the implementation of EPA’s copper rule by two years. The copper rule, finalized in May 2024, had required smelters to curb pollutants including lead, arsenic, mercury, benzene and dioxins under updated federal air standards. Never mind that pesky toxic air pollution: we need our chips!
The conservative American Enterprise Institute says the best thing we can do to improve our competitiveness with China is get rid of environmental review. (Congress has pretty much done that for semiconductors already.)
On the other side of the ocean, a TSMC-led consortium is begging Taiwan for more green energy. “With the worldwide adoption of renewable energy, plus the fact that semiconductor factories require tons of watts, you’d think that Taiwan, of all places, would be awash with power generation of the green kind. Surprisingly, Taiwan doesn’t appear to have power capacity for fab expansion, nor is it mostly green. … [T]he Taiwan Semiconductor Industry Association is pressuring the government to ensure a plentiful supply for the coming years in the face of an unprecedented ‘power siege’.”
Labor and Workforce News
Four charts illustrate the current state of US manufacturing. tl/dr:
- The factory construction boom is leveling off.
- Factory jobs are declining (and declining faster in semiconductors than any other sector – down 24.1% in the last year).
- US factories have fewer robots than many other countries.
- Manufacturing accounts for a small and shrinking sector of the US economy.
Applied Materials plans to lay off 1,400 employees despite record sales.
We’re Also Reading
Harvard’s Kennedy School of Government recently held a conference on industrial policy. You can watch the panels here.
Scientists built computer memory out of shiitake mushrooms. Here’s more.
And finally, a Marxist take on the AI economy.
Happy Halloween! See you in November.
