Transforming the Semiconductor Supply Chain

Guests to Samsung DC’s latest Semiconductor event with Axios were welcomed by a composite digital American flag made of a microchip displayed from the ceiling. As they entered the space where the event took place a message was clear to all: transforming human imagination into-real world possibilities is exactly what is happening in Samsung’s semiconductor manufacturing facilities in Texas. With an investment spanning $47 billion since 1996, this is an enduring investment in American capacity to shore up domestic semiconductor production and preserve U.S. leadership in innovation in what’s becoming a vital industry to anything with an on/off button.

Gene Irisari, Vice President of Public Affairs and Head of Semiconductor Policy caught up with Chris Frates founder of the Storyline to speak more about the future of Samsung’s Texas-made chips:

1. First things first: As a Korean company, just how long has Samsung been manufacturing and investing here in the U.S.?

Irisari: Samsung has been in the U.S. for 47 years, and 27 on the semiconductor side.

Our biggest fab, and when I say fab I mean fabrication facility, is in Austin. It’s the highest output and most advanced in the U.S.

• We’ve had it since 1996, expanded in 2006 and over that time we’ve invested $18 billion in the facility.

2. What you need to know: How important is workforce development to the success of the CHIPS Act and the U.S. semiconductor industry at large? What could policymakers be doing to move that forward?

Irisari: Workforce is vital to the success of the CHIPS Act — it’s the lifeblood of our industry, and it allows us to remain innovative.

• Without the workforce, we can build all these fabs and not have people to work there.

Studies show that over five years the semiconductor industry will create 280,000 new jobs — 42,000 within the semiconductor industry.

I think the trend of semiconductors is going upward as things become more connected and autonomous — you have more EV cars, there’ll be a lot more semiconductors needed.

Samsung is investing in the U.S. because of the diversity of the workforce and the great workers that we can attract from the top universities.

• We need to work with a vast number of community colleges to train the manufacturing workforce and research universities to ensure that more kids are entering STEM fields, specifically working in hardware, engineering and the semiconductor industry.
• The American Semiconductor Academy initiative is making standardized curricula for semiconductor training across the U.S. — so a student from Iowa can get a job in Arizona, Texas, Oregon or New York.

The CHIPS Act needs to involve everyone across the United States.

3. Looking ahead: How can state and federal policymakers support this?

Irisari: The research money that was a part of both the Chips and Science Acts needs to be fully funded. This will help propel innovation, particularly in STEM.

4. What this means: How critical is it that these chips get manufactured quickly? What are the stakes?

Irisari: Semiconductors are important parts of everything from household items to medical and defense devices. During COVID-19, supply chains were affected for anything with an on/off switch. We need to start building now to get our economy and manufacturing back up and running.

The fact that we’re moving most of that manufacturing back to the U.S. is very important for national security and critical infrastructure reasons.

5. Okay, but: How fast is fast in terms of getting these things up and running?

Irisari: They’re massive in size and it takes years for them to be built and then equipped.

• The fab that we’re building in Taylor, Texas is half a mile long and two football fields wide — filled head to toe with tools and automation.
• So that’s why these fabs take time and cost $30-$40 million each.

We committed before CHIPS Act was done because we had faith Congress and the Administration to get it done.

6. The impact: How does the CHIPS Act reshape not just Samsung but the entire industry? What’s it going to do for America?

Irisari: In the last few decades the percentage of semiconductor manufacturing in the U.S. has gone from close to 40% down to 12%.

That’s mainly because:

• Manufacturing moved overseas. Other countries realized the importance of this industry and they built national incentive programs to help with taxes, workforce and infrastructure costs.
• We are now facing a cost gap and worsening ties with China.
• There are now geopolitical risks in the places where semiconductors are manufactured — like Taiwan and North Korea.

So, if something happens, like a war or COVID, the U.S. is seeking to bring back and fill gaps in its domestic ecosystem.

7. An expert take: Will we get a little bit of everything? What’s your prognosis?

Irisari: There was $52 billion allocated for the manufacturing portion of chips in science and 500 different companies — whether they’d be chip makers, design companies or equipment manufacturers — up and down the supply chain expressed interest.

So even though $52 billion sounds like a tremendous amount of money, it doesn’t go very far when you’ve got all those companies and the cost of valves is high.

8. The takeaway: What’s the one thing people should take away from tonight when it comes to semiconductors and policy?

Irisari: Semiconductors are very important. They affect everything in your everyday life. Whether you jump in your car or pick up your phone, everything electronic has semiconductors.

Without them, our country would be in a really bad economic and national security situation.

Bringing fab manufacturing back to the U.S. helps not only national security but economic security and it creates high-paying jobs.

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