Semiconductor Site Selection Activity on the Rise in the U.S.

by King White, on Feb 2, 2022 3:51:22 PM

A number of new large-scale semiconductor site selection projects in the U.S. have been announced in recent months as global chip demand is at an all-time high and the supply chain has been disrupted due to Covid-19. Historically, about 80% of semiconductor manufacturing has occurred in Asia, with only 12% of the world's chips made in the U.S. (down from 37% a few decades ago). However, damaging supply chain disruptions are causing serious semiconductor shortages across all industries, which power thousands of products such as cars, cell phones, electronics, gaming devices, and healthcare products. The shortage of chips has hit the automotive industry especially hard, delaying production and, driving up inflation. In the electronics world, Apple has cut back on production of the iPhone 13, creating much longer wait times.

This situation has compelled several companies to expand production in the U.S. to partially offset the global semiconductor shortage and also regain control of their supply chains. Recent announcements include:

  • Intel has chosen 1,000 acres near Columbus, Ohio to build a $20-billion semiconductor plant that will employ 3,000 workers. The project will initially have two chip factories that should be operational in 2025. The project is the largest single private-sector investment in Ohio's history.
  • Samsung Electronics plans to invest $17 billion to establish a new chipmaking plant in Taylor, Texas. The facility will produce advanced logic chips for next-generation devices. More than 2,000 new semiconductor jobs and 6,500 construction jobs will be created. An economic incentive package of an estimated $677 million will be provided to Samsung.
  • Texas Instruments has announced it will spend $30 billion to establish a new semiconductor manufacturing facility in Sherman, Texas. Production from the first facility could start as early as 2025. With the option to include up to four fabs, the company will create up to 3,000 new jobs. The company accepted a $148-million economic incentive package.
  • The Taiwan Semiconductor Manufacturing Company will build a new plant in Phoenix, Arizona, for $12 billion. The company will begin making 5-nanometer chips in 2024. Future production plans call for 20,000 wafers monthly for CPUs, GPUs, and IPUs for a range of devices, especially smartphones.

These plants will likely take 3-5 years to complete, each with the potential of growing to $100 billion of total investment or more over the coming decade. These are massive transformational deals for the selected communities. In Ohio, for example, workers at the Intel project will have an average salary of $135,000 per year. The project will also create 7,000 construction jobs and 10,000 indirect jobs.

Utilizing a proven site selection process is critical on projects of this magnitude. Workforce, infrastructure, business climate, economic incentives, and real estate conditions must be carefully evaluated to identify the optimal locations to expand. It will be interesting to see if further growth in the U.S. by the semiconductor industry continues once demand subsides and the supply chain stabilizes.  

Topics:Economic IncentivesReal EstateSite SelectionTexas InstrumentsIntel



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