Techno-Nationalism

Chapter 9Re-shoring Chip Manufacturing to America

The U.S. semiconductor industry was once a leader in chip fabrication. Between 1990 and 2021, however, America’s share of global semiconductor manufacturing dropped from around 37% to around 12%.

High domestic costs partly explain the decline. A study by the Semiconductor Industry Association (SIA), for example, claims that building and operating a semiconductor fabrication plant costs about 30% more in the U.S. than in Taiwan, South Korea or Singapore.¹

For decades, globalisation and the trade liberalisation mindset drove a wave of offshoring of American manufacturing, as we discussed in Chapter 3. During this timeframe, the semiconductor industry turned to licensing and outsourcing agreements, resulting in today’s paucity of chip manufacturing capacity across America.

As semiconductor value chains rationalised, production activities migrated to the most optimal locations, and pure-play fabrication ended up gravitating almost entirely to Taiwan. In 2023, for example, Taiwanese contract manufacturers fabricated around 60% of all the world’s chips, most of which were produced by a single company, TSMC. Regarding the most advanced leading-edge chips, TSMC produced an astounding 90% of the world’s supply.

It is important to remember, however, that fabrication represents just one portion of the semiconductor global value chain, as we discussed in Chapter 7.

Other than chip fabrication, American semiconductor companies dominate key ...